Security Token Offerings (STOs) are a method of distributing security tokens and exist somewhere between Initial Coin Offerings (ICOs) and Initial Public Offerings (IPOs). To better understand this, it's important to note that security tokens are equity tokens that represent an equity stake in a company or asset, in addition to whatever future returns are associated with partial ownership of that entity, such as dividend payouts. STOs are generally considered superior to ICOs due to the fact that STOs offer instant settlement times, clearer regulatory guidelines, higher liquidity, and a lower barrier to entry in many instances, among other benefits. Since enterprises that create registered securities must adhere to specific compliance and regulatory requirements, STOs avoid a lot of the market ambiguity which ultimately turned many investors off to ICOs, while continuing to offer a straightforward, investor-friendly method of issuing, trading, and storing tokenized equity shares.
