ICO Vs STO: Know The Difference When Working With Investors With The Help Of An Attorney

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Initial Coin Offerings, or ICOs, and Security Token Offerings, or STOs look similar at first glance, but the two are different in a number of ways. Both STOs and ICOs offer investors a token or coin that is valuated at the rate in which they invest in the company. ICOs are less regulated, and they don't come with any underlying collateral that protects the investment. As each is a form of digital currency, it can be easy to get confused between the two. STOs offer investors more than a token and often include some sort of bond, stock or investment trust that protects the investment. Each offering is valuable, and a good way for companies to meet capital needs. 

ICOs Raise Capital When Regulation Prohibits It Otherwise

For businesses trying to raise capital quickly without dealing with a bunch of regulations, offering ICOs to investors is a good option. ICO lawyers will help you set up the parameters of your ICO, what each unit is worth and how the investment will appreciate over time. A clear contract between your company and all investors will be drawn up, and your ICO lawyer will ensure that you, your company and your investors are all protected within the contract. The tokens are considered coins that you can use, making it crypto-currency and not based on speculation.

STOs Follow Stringent Regulations

STOs are set up knowing that you are going to have to file with the Securities Exchange Commission. It is a more secure investment, as there are underlying assets that protect the investment from losing money in the short term. Projects that are funded by an STO are often better established than those being funded by an ICO, making it a safer investment. STOs are also an excellent way to fund your project, but you need to have STO attorneys look over your contract, your offerings, and file with the SEC on your behalf to ensure that all of your paperwork is correct.

Setting up a strategy for your investors to give you money in exchange for ICOs or STOs is a process, and it's important to work with attorneys to set up your project and get it funded legally. With the right contracts in place, you can build up your equity and grow your business as you see fit. When capital is a concern and you want to offer digital products, it's time to see what your options are.