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This is the second article in a series of two articles on the security token offer ("STO"). "). & Nbsp; first explains why STOs are becoming more popular. The second & nbsp; explains & nbsp; how to correctly perform an STO.

The world of initial offerings of coins have raised more $ 22 billion in just 2 years. After 2 years, the SEC has finally put forward a frame to determine whether a token sold in an ICO falls within their regulatory jurisdiction. Anticipating these long-term forecasts, the industry has already begun to move towards offers of compliant security tokens. With a rising market of cryptocurrency reminds 2016The year before the meteoric rise of Bitcoin and ICOs, it is important to start preparing for the next big fundraising opportunity.

This guide will deal with the preparation of an offer of security tokens, issues to consider and an introductory guide to getting started with your token offer route. .

From my own consulting work with companies on managing security chip offerings, there are three major considerations regarding OCS: regulation, technology infrastructure and markets. secondary.

The regulations govern the conduct of your offer, the sources of financing and the restrictions applicable to your new negotiable badet once it is at liberty. The technology infrastructure ensures security of storage and transaction execution, determines the interoperability of the ecosystem and activates the capabilities of the generated token. Finally, secondary markets are the platforms that your investors need to exchange tokens, which is probably the most important relationship to satisfy your investors.

settlement

When it's about raising money through an offer of security tokens, the goal is to raise funds from a wide range of investors without the burden of money. Recording linked to an initial public offering.

However, it is not because the tokens attract new types of investors that you can create an offer totally indifferent to the regulations. Depending on who you fund, how much you plan to collect, and how you plan to do it, there are different levels of regulation.

With the help of Gordon Einstein, a US securities lawyer, chief legal officer of Distributed Labs, and advisor to more than 20 Blockchain companies, I compiled the most popular exemptions when a security token offer complies. Note that you should consult a lawyer for more specific legal information and consider the following as general guidelines.

For those who do not know, a qualified investor in the United States is a person whose net worth is greater than $ 1 million or whose salary exceeds $ 200,000 per year in the last two years.

There are many choices and it may be difficult to choose the way forward. In deciding the route to choose, Einstein says the following:

It is important to ask yourself why you are doing STO. & nbsp; Do you do this to raise funds or do you do this to put chips in the hands of customers? & nbsp; If it's only fund raising, you do it under Reg D or Reg A. If you want clients to have tokens for them to use, you have two options: Reg A + or an initial public offering for public savings. & nbsp; Once you have made the basic decision, all the other information you will do is very well informed.

Do not forget that utility tokens are not titles, but transferable software licenses. & nbsp; Another strategy for putting public service tokens into people's hands is to create a separate ICO from the service tokens once the platform is built, and then force investors from your security tokens to become service tokens. once the ICO is finished. You do not have to become a reporting company when you have a security offer for a utility token.

It is possible to combine various exemptions. For example, tZero, the best-funded, most compliant digital badet platform and US-based digital stock exchange, Overstock.com, raised funds through a Reg offer. D 506c and a Reg S offer.

Technology

When considering your technology stack, the first consideration is the string on which your token will stay active. Once this is understood, the next decision is how the token will be designed to be both secure and interoperable with the market. I spoke with Saum Noursalehi, CEO of TZero, to find out more,

Most of the players in the sector have come together around the ERC-20 chips. This standard is an intelligent contract technology designed for security tokens, based on the Ethereum blockchain. & nbsp; There are several standards based on the ERC-20 protocol, including our open source protocol t0ken.

For those who do not know, a smart contract is an immutable and technically binding contract that lives in the blockchain. It can not be modified or modified, except for its source code and its deployment in open source.

In the world of utility-based tokens, most issuers have chosen to standardize on the ERC-20 standard. This standard simply creates a new big book with its own native token or unit of account over the Ethereum blockchain. & nbsp; ERC-20 was chosen for simplicity of design and ease of interoperability.

Designing your token for interoperability is very important. If you choose the wrong standard, your investors may not have many options to store their tokens securely and secondary markets may not be able to host your token. The network designed for ERC-20 tokens is so wide that most cryptocurrency portfolios or purses can easily integrate tokens built on this standard. & nbsp;

As noted in the previous section, with respect to security-based tokens, an additional layer of regulatory compliance is required to determine who is able to buy, exchange, and interact with customers. chips. As a result, companies and organizations have created new standards that reflect the ERC-20 model and have additional complexities, such as whitelisting and address locking, to allow tokens to comply with the regulation. security.

These new standards are considered backward compatible with ERC-20, which means that any cryptocurrency wallet or purse that can hold ERC-20 tokens already contains all or part of the infrastructure needed to easily add a new standard token. . You must know four different token standards.

ST-20

The standard security token of origin developed by Polymath. The token allows you to define in the smart contract a set of rules indicating who can interact with the token and how. Polymath offers a set of pre-coded control modules that can be implemented with this standard.

R-Token

Very similar to ST-20, except that this standard involves three intelligent contracts (A, B & C, C) to allow scalability. & nbsp; The Smart Contract A is a simple ERC-20 token, which refers to Smart Contract B to define the rules that interact with the tokens and interact. & nbsp; Smart Contract B then refers to Smart Contract C for the most up-to-date rules about who can interact with the tokens and how they can interact. The C smart contract rules can then be changed without it being necessary to change the general ledger state in the smart contract A nor any downtime for the token. This happens by deploying a new Smart C contract and making smart contract B refer to the new contract. This standard is developed by Harbor.

ERC-1400

Designed for more complex title types, incorporating the differences between the shares of a single issuer. The design is such that there is only one main token with various "slices," which are essentially sub-ledgers, each representing a percentage of the master token. This allows an issuer to offer different clbades of securities for the same underlying badet, such as restricted shares versus unrestricted shares or preferred shares over ordinary shares. This standard has been developed in cooperation by some of the developers of both ST-20 and ERC-20 standards. & nbsp; The token can also be backward compatible with the ERC-777 standard, a standard designed for non-fungible tokens.

ERC-1404

This standard is designed to allow the interoperability of various token standards, such as ST-20 and R-Token, with cryptocurrency exchanges and portfolios. This standard was designed by the team behind Tokensoft and Polymath.

Secondary Markets

One of the main reasons for the success of fundraising through token offers is the liquidity provided by the blockchain generated by the reduction in trade frictions. This means that investors are able to invest in tokens backed by a blockchain and have a much lower risk profile compared to a conventional non-cash badet (equal value for support). This makes secondary markets a platform where investors with a supply of security chips can sell their chips in an open market, an extremely valuable part of the ecosystem. For your token offer to be successful, your investors must be able to trade.

However, unlike stock exchanges hosting traditional or utility-based cryptocurrency tokens, the & nbsp; hosting security tokens must be subject to additional regulatory control to enable transactions. The result is that many exchanges around the world refuse to offer security tokens.

Many exchanges around the world are exploring pairs of security chips such as Coinbase, Binance, the Canadian Securities Exchange, SIX Swiss Exchange and the Malta Stock Exchange. But despite everything, with all the players involved, there is very little exchange of live security chips.

With regard to the exchange of security tokens, there are currently two paths, centralized and decentralized. Centralized exchanges have the advantages of being user-friendly, regulated and facilitating access to traditional capital. However, there are currently only two US-style, tZero and OpenFinance security chip exchanges, and they currently do not have the same trading activity as traditional stock exchanges or crypto stock exchanges. -change.

For decentralized exchanges, such as Bancor, there are many more choices. The barrier to list a token is much smaller and they have been online for longer. Unfortunately, users have to manage their own private keys and smart contracts are being used more and more. The use of smart contracts means investors need to research code security because a bug in the code could result in the loss or theft of millions of dollars.

If you are looking for an alternative way of raising funds for your business but using a utility-based token in your configuration does not show any use cases, you now have all the tools needed to generate a technology-compliant security token. offer. & nbsp; Want to know more about fundraising via an ICO? Check-out my other articles or learn more at https://www.inwage.com.

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This is the second in a series of articles in two articles about the offers of security tokens ("STO"). The first explains why STOs are becoming more and more popular. The second explains how to correctly perform an STO.

The world of first coin offers has raised more than $ 22 billion in just two years. Two years later, the SEC finally put in place a framework to determine whether a token sold in an ICO falls within its regulatory jurisdiction. Anticipating this long-term orientation, the industry has already begun to move towards compliant security chip offerings. Given the current rise in the cryptocurrency market, which is reminiscent of 2016, the year before Bitcoin's and ICO's meteoric rise, it is important to start preparing for the next big fundraising opportunity.

This guide will deal with the preparation of an offer of security tokens, issues to consider and an introductory guide to getting started with your token offer route. .

From my own consulting work with companies on managing security chip offerings, there are three major considerations regarding OCS: regulation, technology infrastructure and markets. secondary.

The regulations govern the conduct of your offer, the sources of financing and the restrictions applicable to your new negotiable badet once it is at liberty. The technology infrastructure ensures security of storage and transaction execution, determines the interoperability of the ecosystem and activates the capabilities of the generated token. Finally, secondary markets are the platforms that your investors need to exchange tokens, which is probably the most important relationship to satisfy your investors.

When it's about raising money through an offer of security tokens, the goal is to raise funds from a wide range of investors without the burden of money. Recording linked to an initial public offering.

However, it is not because the tokens attract new types of investors that you can create an offer totally indifferent to the regulations. Depending on who you fund, how much you plan to collect, and how you plan to do it, there are different levels of regulation.

With the help of Gordon Einstein, a US securities lawyer, chief legal officer of Distributed Labs, and advisor to more than 20 Blockchain companies, I compiled the most popular exemptions when a security token offer complies. Note that you should consult a lawyer for more specific legal information and consider the following as general guidelines.

For those who do not know, a US qualified investor is a person whose net worth is greater than $ 1 million or whose salary exceeds $ 200,000 a year for two years.

There are many choices and it may be difficult to choose the way forward. In deciding the route to choose, Einstein says the following:

It is important to ask yourself why you are doing STO. Do you do this to raise funds or do you do this to put chips in the hands of customers? If it's simply fund raising, you opt for Reg D or Reg A. If you want clients to have tokens for them to use, you have two options : Reg A + or a public IPO of your chips. Once you make the basic decision, it gives a great deal of information about what you are going to do.

Do not forget that utility tokens are not titles, but transferable software licenses. Another strategy for putting public service tokens in the hands of people is to perform a separate ICO service tokens once the platform is built and then perhaps convert investors from your security tokens into service tokens. once the ICO is finished. You do not have to become a reporting company when you have a security offer for a utility token.

It is possible to combine various exemptions. For example, tZero, the best-funded, most compliant digital badet platform and US-based digital stock exchange, Overstock.com, raised funds through a Reg offer. D 506c and a Reg S offer.

When considering your technology stack, the first consideration is the string on which your token will stay active. Once this is understood, the next decision is how the token will be designed to be both secure and interoperable with the market. I spoke with Saum Noursalehi, CEO of TZero, to find out more,

Most of the players in the sector have come together around the ERC-20 chips. This standard is an intelligent contract technology designed for security tokens, based on the Ethereum blockchain. Several standards based on the ERC-20 protocol exist, including our open source protocol t0ken.

For those who do not know, a smart contract is an immutable and technologically binding contract that lives in the blockchain. It can not be modified or modified, except for its source code and its deployment in open source.

In the world of utility-based tokens, most issuers have chosen to standardize on the ERC-20 standard. This standard simply creates a new big book with its own native token or unit of account over the Ethereum blockchain. ERC-20 was chosen for simplicity of design and ease of interoperability.

Designing your token for interoperability is very important. If you choose the wrong standard, your investors may not have many options to store their tokens securely and secondary markets may not be able to host your token. The network designed for ERC-20 tokens is so wide that most cryptocurrency portfolios or purses can easily integrate tokens built on this standard.

As noted in the previous section, with respect to security-based tokens, an additional layer of regulatory compliance is required to determine who is able to buy, exchange, and interact with customers. chips. As a result, companies and organizations have created new standards that reflect the ERC-20 model and have additional complexities, such as whitelisting and address locking, to allow tokens to comply with the regulation. security.

These new standards are considered backward compatible with ERC-20, which means that any cryptocurrency wallet or purse that can hold ERC-20 tokens already contains all or part of the infrastructure needed to easily add a new standard token. . You must know four different token standards.

ST-20

The standard security token of origin developed by Polymath. The token allows you to define in the smart contract a set of rules indicating who can interact with the token and how. Polymath offers a set of pre-coded control modules that can be implemented with this standard.

R-Token

Very similar to ST-20, except that this standard involves three smart contracts (A, B and C) to allow scalability. The Smart Contract A is a simple ERC-20 token that refers to the B Smart Contract for the rules that interact with the tokens and how they can interact. Smart Contract B then refers to Smart Contract C for the most up-to-date rules about who can interact with the tokens and how they can interact. The C smart contract rules can then be changed without it being necessary to change the general ledger state in the smart contract A nor any downtime for the token. This happens by deploying a new Smart C contract and making smart contract B refer to the new contract. This standard is developed by Harbor.

ERC-1400

Designed for more complex title types, incorporating the differences between the shares of a single issuer. The design is such that there is only one main token with different "slices", which are essentially sub-ledgers, each representing a percentage of the main chip. This allows an issuer to offer different clbades of securities for the same underlying badet, such as restricted shares versus unrestricted shares or preferred shares over ordinary shares. This standard has been developed in cooperation by some of the developers of both ST-20 and ERC-20 standards. The token can also be backward compatible with the ERC-777 standard, a standard designed for non-fungible tokens.

ERC-1404

This standard is designed to allow the interoperability of various token standards, such as ST-20 and R-Token, with cryptocurrency exchanges and portfolios. This standard was designed by the team behind Tokensoft and Polymath.

One of the main reasons for the success of fundraising through token offers is the liquidity provided by the blockchain generated by the reduction in trade frictions. This means that investors are able to invest in tokens backed by a blockchain and have a much lower risk profile compared to a conventional non-cash badet (equal value for support). This makes secondary markets a platform where investors with a supply of security chips can sell their chips in an open market, an extremely valuable part of the ecosystem. For your token offer to be successful, your investors must be able to trade.

However, unlike exchanges with traditional or utility-based cryptocurrency tokens, exchanges hosting security tokens must be subject to additional regulatory control to enable transactions. The result is that many exchanges around the world refuse to offer security tokens.

Many exchanges around the world are exploring pairs of security chips such as Coinbase, Binance, the Canadian Securities Exchange, SIX Swiss Exchange and the Malta Stock Exchange. But despite everything, with all the actors involved, there is very little exchange of live security chips.

With regard to the exchange of security tokens, there are currently two paths, centralized and decentralized. Centralized exchanges have the advantages of being user-friendly, regulated and facilitating access to traditional capital. However, there are currently only two US-style, tZero and OpenFinance security chip exchanges, and they currently do not have the same trading activity as traditional stock exchanges or crypto stock exchanges. -change.

For decentralized exchanges, such as Bancor, there are many more choices. The barrier to list a token is much smaller and they have been online for longer. Unfortunately, users have to manage their own private keys and smart contracts are being used more and more. The use of smart contracts means investors need to research code security because a bug in the code could result in the loss or theft of millions of dollars.

If you are looking for an alternative way of raising funds for your business but using a utility-based token in your configuration does not show any use cases, you now have all the tools needed to generate a technology-compliant security token. offer. Want to know more about fundraising from an ICO? Check out my other articles or learn more about https://www.inwage.com.