Unlike Utility Coins such as Ethereum and Bitcoin, STOs represent asset-backed tokens as they are not portfolios as a standalone.

Security Tokens are assets that are tokenized and made available as tokens for investors to purchase. The value is derived from three main principles:

Features: Inclusion of voting rights, dividend, work reward, product access, etc.

Role: This can be a right to vote or equity, earnings, toll, and currency

Purpose: Portfolio Enhancement, seamless experience, and distribution benefits.

Since the ICOs were deemed to be securities by SEC, these are subjected to regulations of the financial institutions. In the US, for instance, securities are regulated under legal frameworks such as Regulation D 506(b), Reg D 506(c), Reg A+ or Reg S for foreign funding. Under there are a series of exemptions which companies are provided if they do not pass Howie’s Test.

Security Token Offering Platform like Blockchain App Factory enables issuers to create their own asset-backed tokens to raise funds for their project.