5 Best STO Issuance Platforms and Why We Think These Are the Best
The cryptocurrency wave has recently been elevated with the introduction of one of its new product – security tokens.
A lot of companies are now opting to tokenize their securities to be able to trade on global exchanges. And companies are being urged to take advantage of this mode of doing business due to its numerous advantages as may be seen in the video below:
But make no mistake – security tokens are not the same as utility tokens. This is the main reason why they need much more attention in order to make economic sense to the issuing company.
As at today, it is believed that there are over 500 ERC-20-based active tokens in the crypto space, but very few of them survive the market forces. Among the factors that determine the success of a token is the issuance platform. However, with that comes another challenge: identifying the best STO issuance platforms.
With a security token offering platform, users are able to reach a wider range of potential investors, which enables them to attain their funding target(s) faster. STOs have been very influential when it comes to the direction that blockchain is taking, and they also introduced a form of legal structure in the crypto space.
In this article, we scrutinize some of the best STO issuance platforms to help you make a more informed decision when it comes to choosing a platform for offering your security token.
What is a Security Token (STO)
Unlike the conventional cryptocurrencies such as Ethereum and Bitcoin, which are assets on their own and can be used independently, STOs represent other assets and they are not standalone digital portfolios.
STOs can literally represent any form of asset, including real property such as buildings or land, shares, bonds, and more.They derive their value from their three main principles:
- Features: This includes voting, work reward, product access, and sharing of profit
- A role: This can be a right, earnings, toll, and currency
- Purpose: The purpose reinforces economic creation, a frictionless experience, and distribution benefits.
From their names, tokens that are categorized as securities are subject to some forms of regulations from the securities exchanges. In the US, for instance, securities are regulated under Regulation D of the Securities and Exchange Commission laws. Under the same law, companies are also provided with the various exemptions of tokens as securities.
Let’s now look at a few security token issuance platforms.
Security Token Offering Platforms
For a while now, private equity investment was a venture reserved for the “chosen few” – if you didn’t possess a few thousands or millions of dollars, you simply had to pass on this one. Otherwise, you’d have to pool your investments as a team in order for you to have a shot at this investment type.
But with the invention of crypto, things changed for the better – brokers were eliminated, the power to take charge of the investment portfolios is now vested in the people, making it possible for everyone with an interest in investing in securities to do so with minimal resources.
In addition to eliminating investment barriers, it is now easier to tokenize a company’s security and have the tokens listed on credible trading platforms.
Security token platforms were created to make the process of token generation much simpler and more democratic. With a simplified token generation process, you should be able to avail your securities on the market within a very short period of time.
That said, here are our top five picks of STO issuance platforms:
Polymath is a blockchain platform established by Trevor Leverkor. The main purpose of the platform is to help the conventional financial securities integrate with the blockchain tech. And the best thing about this platform is that it has a detailed guide on the whole tokenization process.
Here is the process of creating a security token on the platform:
With this detailed video, you can set up your security token on the platform in a matter of minutes.
The platform, which is primarily powered by its native token (Poly), is premised on the fact that real assets are being drawn towards being a part of the blockchain technology and they are convinced that the crypto space is set to explode; this will result from an investor stampede. According to them, it is highly likely that conventional assets will start shifting to more digitized ways of operation.
Polymath is made up of four core layers that define the creation of tokens as well as compliance with the set operating guidelines. These include:
- Protocol layer
- Application layer
- Legal layer
- Exchange layer
Generally, the protocol layer is in charge of all the computation on the platform, while the application layer allows users to create their own security tokens. The legal layer offers guidance to those who wish to create tokens on the platform. And lastly, the exchange layer is more of a closed-end KYC/AML accreditation that offers its users instant liquidity for their assets.
With well-defined structures and a favorable trading environment, the platform is a darling to many investors and companies looking to tokenize their securities. The formal mode of operating on the platform has, to a large extent, demonstrated that just like the conventional securities, the crypto tokens can also be created and traded within the confines of the law.
This is a more recent STO platform whose core objective is to offer an end-to-end tool for individuals and companies looking to create security tokens. Securitize enjoys a good reputation in the cryptocurrency space and it offers a highly flexible and super back-end to assist users in the process of issuing their securities.
One of its most distinguishing features is the ability to incorporate third-party applications that operate on the Ethereum network; this, therefore, means that users are be able to customize their projects with things like client establishment, interface customization, as well as collaborating with third-party developers.
In addition, over time, the platform has demonstrated its ability to maintain high-security standards through the use of clear guidelines on the raising and management of client funds.
With these and more features, Securitize currently ranks as one of the best security token issuance platforms globally.
Swarm fund is a blockchain-based STO platform that primarily operates on the SRC20 protocol. The cryptographic protocol allows users to tokenize any form of assets, including crypto hedges, agricultural products, and so on.
The Swarm platform is focused on deploying conventional capital into the digital space by creating a clear market structure on the blockchain technology. Swarm’s protocol has a lot of similarities to that of the ERC20. However, the differences are equally notable with the main ones being that the SRC20 is merely an extension of ERC20 and, secondly, the SRC20 contains some more superior features that outlines legal structures, assets location, and transfer rules, among other things.
After issuing its ICO last year (2017), Swarm has now embarked on its next frontier, which will entail introducing artificial intelligence into their platform to boost user experience.
This is another well-known security token exchange platform created in 2015 by a couple of blockchain experts who saw the need to speed up the growth and development of the crypto assets.
In addition, the creation of the platform was also motivated by the need to have a more secure tool for individuals and companies to issue their security tokens.
Unlike most other security token offering platforms, Securrency is quite diverse; it is partly an exchange, partly a currency, partly a bond, as well as an exchange-traded fund share. Users can transfer any form of an asset on the platform, including fiat money, listed securities, and tokens.
Swarm relies on four main layers to help its users to convert their assets into tokens:
- Streamlined Token Issuance Layer: The platform offers a simple drag-and-drop tool that allows users to create their tokens fast from start to end without facing any technicalities. This has made it possible for people with limited tech knowledge to be able to set up their security tokens on the platform with a lot of ease.
- API and Abstraction Layer: This platform also runs a ledger-agnostic security token designing tool. With this functionality, users can easily plug into Securrency’s exchange and gain access to global digital currencies markets.
- Global Identity Wallet Proofing: Securrency was designed with the global market in mind – the developers of the platform borrowed a lot of the platform’s design from the global financial markets so as to serve a larger number of users. The platform features an engine that is able to run a “know your customer” strategy in more than 150 countries across the globe.
- High-Liquidity Model: Even with a global market, a number of users still find it difficult to convert their assets into more liquid forms whenever they need to. The Securrency team realized this and devised a way of converting assets into liquid forms faster regardless of their nature.
This is especially aimed at helping businesses with urgent funding needs to obtain the required capital in the shortest time possible while ensuring that security and transparency are still maintained.
This tokenization model helps users obtain funds for various reasons, including financing an urgent business opportunity or simply expanding a company’s capital base.
Harbor is one of the best STO issuance platforms of all times – it is a decentralized protocol that provides a worldwide platform for issuing security tokens. In addition, the platform also offers a trading tool for digital assets.
The platform was founded by a team of three techies (Arisa Amano, Bob Remeika, and David Sacks), who sought to revolutionize the way the crypto space operated.
The trio is said to have come up with the idea for the platform after they were faced with a lot of technical challenges when trying to issue an ICO a few years ago. The founders would later discover that a lot of other companies were experiencing the same challenges when trying to tokenize their assets.
To cut the long story short, today, the team operates one of the most secure STO issuance platforms with very simple and easy steps for getting started on security tokenization.
The platform simplifies the tokenization process by creating a regulated token known as the R-token. This token originates from the ERC20 token but contains extra features to enable users to check regulator services or on-chain “whitelist”.
The whitelist can be used for purposes such as establishing the requirements for KYC, AML, investor accreditation, as well as certifying certain specified digital assets.
Consider this example:
A real estate company regulated by the Foreign Investment in Real Property Tax Act (FIRPTA) dictates that tax is withheld in the event that the involved investors are of foreign origin.
In this case, the process provided for by the R-token will come in four distinct processes:
- The order of the preferred token is placed by the investor
- The R-token complies with the provided regulator service to make sure that all the legal aspects of the process are adhered to
- And if the legal threshold is not met by an investor, the token displays an error message and the process is terminated
- However, if all the legal requirements are met, then the transfer will be confirmed and completed.
Harbor primarily assists businesses and individuals to issue tokens that are compliant with the set rules and regulations – this role is expected to be a game-changer in curbing cases of fraud as well as legitimacy issues.
But even as that continues to take shape, many industry players are continuing to appreciate the essence of having some forms of regulations in the crypto space. In return, this will help boost the credibility of the various investment vehicles in this ecosystem.
As I mentioned at the start of this post, it is not quite easy to select the best STO issuance platforms among hundreds of other options. But hopefully, you now have a few examples to get you started.
Over to you now: Which of the security token issuance platforms do you like most? Do you know of any other great STO issuance platforms?