A Security Token Offering (STO) is a method of raising capital in exchange for value, such as equity, debt, or asset-backed securities. Investors are issued tokens as a representation of their investment. U.S. securities regulation applies to all securities, whether they are digital or traditional, which include digital asset securities (a.k.a. Security Tokens).
Securitize offers a fully regulated, end-to-end digital solution that leverages blockchain technology and security tokens to enable capital raises and provide the potential for shareholder liquidity.
What is different about raising capital leveraging the Blockchain?
At the most basic level, you can think of the blockchain as a ledger, where, similar to a database, transactional data is written. Each transaction is written and verified in a block on the blockchain. Smart contracts with pre-set rules are written into the block to automatically trigger activities, such as a distribution, on a specific date or at a specific milestone. The creation of the issuance, the recording of the transaction, the transfers of securities and the recording of shareholder information all occurs digitally.
It's a common notion that digital activities with little-to-no human interaction tend to happen more quickly. That’s typically the case of financial activities leveraging the blockchain as well. With less human dependency for operational tasks, marketplaces leveraging the blockchain can trade 24/7 and take advantage of instant settlement, where unlike the T+2 (trade +2 days) settlement period associated with public market stock transactions, private marketplaces leveraging the blockchain typically can complete trades in minutes.
Information recorded on the blockchain is transparent and auditable. Through the Securitize issuer dashboard, issuers can see shareholders in near real-time. Additionally, issuers have the ability to send shareholder communications, issue perks and rewards, and issue distributions.
Not familiar with the ins and outs of blockchain technology as it relates to the financial industry? Check out our article on the Not So Beginner’s Guide to the Blockchain.
Asset classes using security token offerings
Startup and private companies
In growing adoption, more companies are turning to raising capital and managing their cap table through services leveraging the blockchain. Securitize offers a series of solutions to help established startups and private companies raise capital and provide the potential for liquidity.
Crypto-related funds, hedge funds, venture capital funds, and even asset managers are beginning to turn to digital asset securities. Securtize’s roots are in tokenizing the first venture capital funds to issue an STO.
As early adopters, real estate developers and investors have leveraged STOs to raise capital for specific projects. Securitize is one of the leading partners in tokenizing real estate issuances.
Types of digital asset securities
The security token may represent ownership stake in the issuing business, often with voting rights. Similar to a share of stock in a company but it’s transacted and recorded leveraging the blockchain.
The security token represents a loan at an interest rate. This is where an investor is funding a firm or asset in part or whole in exchange for interest such as NBA player contracts, real estate mortgages, or corporate bonds. Smart contracts make it possible for automatic distributions to occur on pre-defined schedules, with less human interaction.
The security token may represent ownership stake in an asset such as real estate or commodities.
The complete Reg. A+ solution for raising up to $75M in capital from U.S. retail investors, and for providing a path for liquidity.
End-to-end solution for raising unlimited capital from U.S. accredited investors, and for providing a path for liquidity.
Reg. D + S
End-to-end solution for raising unlimited capital from U.S. accredited investors and International investors, and for providing a path for liquidity.
Supporting primary and secondary markets
Leveraging our end-to-end solutions, we help enable the capital fundraising option that fits your business, as well as the secondary market, while ensuring compliance standards are achieved.
Reg. D (506b, 506c)
No SEC filing
Accredited and Institutional U.S. Investors
Raise up to $5M
All US Investors
Reg. A / Tier 2
Raise up to $75M
All US Investors
Reg. A / Tier 1
Raise up to $20M
All US Investors
U.S. and non-U.S. companies
No SEC filing
International Investors (non-U.S.)*
Only international investors pursuant to the regulations associated with the investor's country of residence.