The Complete Guide

to Security Token

Offerings
CONTENTS
What is an STO?
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

STO vs. ICO

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Security Token Offerings: Trend Analysis and Projections

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

Regulatory Basis and Jurisdiction

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Security Token Regulations within the U.S.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7

Regulation D
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8

Regulation A+
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9

Regulation CF
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Security Token Regulations within the European Union

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12

The Most Friendly STO Jurisdictions

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

Security Token Standards

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

ERC Token Standards

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16

Non-ERC Token Standards

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

The STO Ecosystem

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

The STO Launch Process

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

Major Technology Players

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Token Issuers
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Agencies
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

Exchanges

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Launching with TokenGear

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

User Dashboard
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

About the Project

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

KYC Verification
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

FAQ & Contact Section

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29

Contribution Flow
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30

Admin Platform
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

Dashboard
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31

User Management
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32

Transactions
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

Invoices
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34

Features
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

FAQ
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Milestones
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35

Email Management System

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About Us
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36

Settings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37

1
What is an STO?

A security token offering, or STO, is understood as Securities include financial instruments such as:
the process of issuing coins or tokens for a
stakeholder to invest for future profit. These assets bonds

guarantee investors the right to future dividend stocks

payments.

shares

venture capital (VC)

In terms of the current state of the market, it is private equity

thought that security token offerings will bind revenue participation notes
traditional financial and cryptocurrency markets,
resulting in breakthrough progress for investment Because they are tokenized and presented with a
opportunities in general.

security token offering, these instruments hold

monetary value. Securities are presented as
Within the blockchain environment, tokenized fungible, transferable investment instruments
securities are merging with technological backed by real-world value.

advantages, providing stakeholders with security

supported by regulatory structures. Unlike the Security tokens hold information about the
traditional financial system, security token offerings tokenized asset and provide stakeholders with the
back participants with investment smart contracts, right to product ownership, which is securely
ensuring that all parties comply with their recorded on the blockchain ledger. STOs offer a
obligations. hybrid approach, as they provide greater
regulatory safety than ICO. At the same time, they
overlap with traditional public offerings through
blockchain technology.

2
STO vs. ICO aren’t backed up by security measures. Often,

utility token offerings turn out to be scams.

The process of an STO launch is pretty much the

same as the ICO process. The major difference, Generally, there are two ways to design a token

however, can be found in token characteristics and within a fundraising campaign: either as a utility

features.

token offering through an ICO or as a security

token offering through an STO.

As mentioned above, security tokens are backed

by real-world assets and designed in compliance It should be stressed that utility tokens are no

with regulatory governance.

longer recognized in accordance with U.S. SEC

An Initial Coin offering, on the other hand, presents regulations. Thus, even if a token is presented as a

coins or tokens as a utility. These coins can be used utility, it is still recognized as a security by the SEC.

to gain access to the platform as well as for

internal purposes. The purpose of these types of This means that while issuing tokens with an

coins is to grant users functionality and access offering, the issuing party should offer them only

within the platform.

to accredited stakeholders who have undergone

KYC verification with a signed document or

Utility coins are not positioned as investments. The agreement highlighting all of their rights and risk

ICO process does not necessarily have to comply factors. The issuer must provide documentation

with legal obligations. On the one hand, it is easier (e.g., a white paper) outlining disclosures, legal

to launch this type of process; on the other, users compliance, and revenue-projection details.

STO VS. ICO

STO

backed by real-world value

money token positioned as an investment

money token

regulatory compliance

ICO

presented as a utility token

money token no investment opportunity

money token

unsafe in terms of regulations

3
Security Token Offerings: Trend Analysis Industries like investment and trading, technology,
and Projections FinTech, and real estate are currently the most
prominent in the context of STO launches:
STOs have recently gained far greater popularity
than ICOs due to regulatory compliance and
security. This has mainly been addressed by the
SEC in the U.S. and by the South Korean FSC.

The most prominent industries in the

context of STO launches
A strong regulatory basis appears to be beneficial,
as it eliminates the chance of fraudulent activity 35
and scams. It reassures big-market players hoping
to raise funds via security offerings by providing 30
them with investment confidence.

25

As a result, more than 100 STOs had been 20

conducted as of 2018, according to the InWara’s
annual report: 15

10

5
Number of STOs in 2008
0
Investments and Tradings

Technology

Financial Services

Fintech
Real Estate

Blockchain and Cryptocurrency

Adversiting and Retail

Business Services
Entertainment and Sports

Automobile and Transportation

Healthcare
25

20

15

10

0
Feb 18
Jan 18

Mar 18
Apr 18
May 18
Jun 18
Jul 18
Aug 18
Sep 18
Oct 18
Nov 18
Dec 18

Source: www.invara.com

Source: www.invara.com

4
According to research, the number of Simple Some of the most prominent STOs are:
Agreements of Future Tokens (SAFT) has risen, as
well. The latest research states that the SEC is Scientific Coin

systematically investigating potential projects for Monart

the SAFT framework: Reit-Bz (BTG)

BitBond

edeXa

Ikioo Tech

The rising number of SAFTs Tropizen

Aspen Coin

25
Blue-Ocean Ventures

HealthBank
10 Having analyzed ICO performance data, it has
become obvious that this type of crowdfunding is
5
dying off. Thus, the number of ICO capitalizations is
gradually decreasing:
0
Feb 18
Jan 18

Mar 18

Apr 18

May 18

Jun 18

Jul 18

Aug 18

Total Capital Raised by ICOs –

Monthly Totals ($M)

Source: www.invara.com
$ 3000M

$ 2500M

$ 2000M
Security token offerings are gaining success at a 1500M
rate of 99%. As of today, the number of active or
$

upcoming STOs equals 60% of all token offerings: $ 1000M

$ 500M

0
The number of active and upcoming STOs
ct 17
ov 17
Dec 17

Feb 18
Jan 18

Mar 18
Apr 18
May 18
Jun 18
Jul 18
Aug 18
Sep 18
Oct 18

Nov 18
O

70

60 Source: www.tokendata.io

50

40

30

20

10

0
Active Upcoming Concluded

Pre-sale Main Sale Private Failed

Source: www.invara.com

5
The ICObench report states that although the
number of ICOs increased in 2018 in comparison to
2017, projects didn’t manage to raise funds as
successfully. There was only a 15% increase in the
number of capitalizations, while the quantity of
crowdsales increased 3.5 times:

2017 2018
#ICOs ended 718 2517
#ICOs started 970 2816
Avg # ongoing
91 481
ICOs daily
#ICOs listed 1349 3804
#ICOs raised
413 1012
funds
Funds raised $10,062,399,721 $11,596,382,015
Average funds
$14,132,583
raised
Variation 2017-18 $1,533,982,293
Variation % 15%

As a result, we can positively state that security

token offerings are more beneficial than initial coin
offerings in terms of:

being more transparent due to KYC and AML

verification

providing more protection for investors

serving as a compliance instrument within the

context of legal finance

ensuring a scalable liquidity pool

eliminating token volatility

6
Regulatory Basis and

Jurisdiction
As governmental authorities have started Security Token Regulations within

regulating blockchain industry activity, it has the U.S.

become crucial to understand the process of
cryptocurrency legalization.

SEC solicitation allows for security token

advertising through mass-media channels like
There is no common rule for cases that can be newspapers, blogs, magazines, company websites,
easily applied. Legal regulations vary from region and broadcasting platforms. However, this doesn’t
to region, requiring a different set of obligations to include the exact business information shared by
be applied in order to conduct crowdfunding stakeholders via their networks for the purpose of
legally.

attracting funds.
Considering the fact that blockchain technology is Key terms within the regulative basis of security
here to stay and will inevitably develop, we are tokens include:

outlining the regulation aspects of various cases in

order to launch security tokens in a compliant Preemption. When a company sells its security
manner.

tokens, it must remain compliant with security laws

as well as federal regulations. While in the
Regulations in the European Union and the United preemption process, a security token isn’t
States vary. Speaking of U.S. laws, the SEC supposed to be registered within state regulations
(Securities and Exchange Commission) defines all or comply with the laws.

tokens offered during ICOs as security tokens. In

addition, various U.S. regulators tend to define Restricted securities. In accordance with the SEC
cryptocurrency differently: statement , securities can’t be listed on the
exchanges without meeting the following
The CFTC (Commodity Futures Trading conditions:
Commission) considers Bitcoin to be a
commodity.
1. Holding Period. Before anyone can sell
The IRS (Internal Revenue Service) considers restricted securities in the marketplace,
cryptocurrency to be a property.
he/she must hold them for a certain period of
The SEC (Securities and Exchange Commission) time. If the company that issued the securities
sees all initial coin offerings as security token is a “reporting company” subject to the
offerings. reporting requirements of the Securities
Exchange Act of 1934, one must hold the
securities for at least six months. If the issuer
of the securities is not subject to reporting
requirements, one must hold the securities for
at least one year. The relevant holding period
begins when the securities are bought and
fully paid for. The holding period only applies
to restricted securities. Because securities
acquired in the public market are not
restricted, there is no holding period for an
affiliate who purchases securities from the
issuer in the marketplace.

7
2.

Current Public Information. There must be 4.

Ordinary Brokerage Transactions. For an

adequate and current information about the affiliate, sales must be handled in all respects
issuing company publicly available before the as routine transactions, and brokers may not
sale can be made. For reporting companies, receive more than a normal commission.
this generally means that the companies have Neither the seller nor the broker can solicit
complied with the periodic reporting orders to buy the securities.

requirements of the Securities Exchange Act

of 1934. For non-reporting companies, this 5. Filing a Notice of Proposed Sale With the
means that certain company information, SEC. Affiliates must file a notice with the SEC
including information regarding the nature of on Form 144 if the sale involves more than
its business, the identity of its officers and 5,000 shares, or the aggregate dollar amount
directors, and its financial statements, is is greater than $50,000 in any three-month
publicly available.

period 1.
3. Trading Volume Formula. For an affiliate, the In order to launch an STO campaign, the project
number of equity securities to sell during any must be compliant with SEC regulations in order to
three-month period cannot exceed 1% of the obtain a license. Projects hoping to raise funds and
outstanding shares of the same class being receive investments from U.S. members can apply
sold; or, if the class is listed on a stock their requests in accordance with the following
exchange, the 1% or the average reported regulations: Reg D, Reg A+, and Reg CF.
weekly trading volume during the four weeks
preceding the filing of a notice of sale on Form Regulation D
144. Over-the-counter stocks, including those
quoted on the OTC Bulletin Board and the This regulation combines four rules: Rule 506 (b),
Pink Sheets, can only be sold using the 1% Rule 506 (c), Rule 503, and Rule 504.
measurement.

Reg D
Rule 506(b) Rule 506(c) Rule 504
Annual offer limit None None $5M
G eneral solicitation No Y es Permitted in certain situations
Investor requirements Unlimited accredited Unlimited accredited None
investors. Up to 35 investors
sophisticated, but
non-accredited investors
SEC filing requirements Form D Form D Form D
Restriction on resale Restricted Restricted Restricted
Preemption of state Y es Y es No
registration

1 http://bit.ly/SEC_statement

8
Rule 503 doesn’t specify any restrictions with possible to raise $5 million with the securities
regard to investor status. As for rule 504, it is only registered with appropriate regulators.

Rule 506 Pros and Cons

Pros Cons

Unlimited Capital — Since registered offerings Accredited Investors Only — Limiting the pool

have become more expensive and complex, of investors is less of a drawback than many
raising an unlimited amount pursuant to believe, as past securities offerings show that
exemptions has gained importance.

a significant majority of funds are raised from

accredited investors

General Solicitation — A general solicitation

includes an offer to sell securities with the use Restricted Securities — With limited exceptions,
of an unrestricted and publicly available securities sold under Rule 506(c) cannot be
website. Most STOs, in the way they are transferred for 12 months. This restriction may
currently conducted, constitute general be problematic for any company that is
solicitations. If you are also doing a sale offering a compliant network token with the
abroad pursuant to Reg S, general solicitation expectation that it can be used quickly in
can become tricky, and you should consult transactions in its network.

with local counsel.

Accredited Investor Verification — The issuer

State Law Preemption — “Covered securities” must take reasonable steps to verify each
are exempt from blue sky laws. investor’s accredited investor status.

Rule 506 (b) and 504 Basic Features

506(b) 504

No General Solicitation — no marketing or Diverse Investor Pool — The STO is open to

advertising of the offering

accredited and unaccredited investors.

No Accredited Investor Verification — 

No General Solicitation — No marketing or
The company must not have any reason to advertising of the offering is permitted. Capital
believe that any investor is not an accredited Raise up To $5 million — this amount was raised
investor.

from $1 million recently to provide more

opportunities to rely on this exemption

Up to 35 Unaccredited Investors — 

They can participate in the offering, but the No State Preemption — Blue sky laws apply,
company’s disclosure obligations become and the company must register its STO, or the
much greater. STO must be exempt from registration under
those laws.

Regulation A+ development. It is possible to raise up to $50

million while attracting unaccredited investors.

Regulation A+ functions similarly to the traditional Compared to Reg D, Reg A+ securities aren’t
IPO (initial public offering) process. It is beneficial restricted in terms of resale. This is beneficial
for young startups or projects in the initial steps of because it provides greater liquidity on the market.

9
Reg A
Tier 1 Tier 2
Annual offer limit $20M $50M
General solicitation No Yes
Investor requirements Permitted before qualification Permitted before qualification
SEC filing requirements Form 1-A + two years of financial Form 1-A + two years of financial
statements statements (annual, semiannual,
current)
Restriction on resale No No
Preemption of state registration Yes Yes

With Reg A+, consider the following pros and cons:

Pros Cons

Diverse Investor Pool — The STO is open to SEC Review — This process is time-consuming,

accredited and unaccredited investors.

expensive, and can take up to 12 months for

STOs. To our knowledge, at the time of
Immediate Transferability — Securities are publication of this article, there have not been
freely transferable immediately after the STO.

any qualified Reg A+ token offerings.

Capital up To $50 million (under Tier Audited Financial Statements — Companies

2) — Under most circumstances, $50 million will must include audited financial statements in
be plenty of capital for a company to grow its the offering statement.

business.

Ongoing Reporting Obligations — The

State Law Preemption (under Tier 2) — The company must file annual reports and
issuance of securities is exempt from blue sky semi-annual reports, which creates additional
laws, but transfers are not exempt unless the costs and distractions for management.

securities are listed on a national securities

exchange (e.g., NASDAQ) or transferred to U.S. or Canadian Entity — If the STO is for
qualified purchasers.

smart securities that do not represent equity

or debt in the company, or for compliant
Marketing — A properly planned Reg A+ network tokens, the company often will need
offering can be a great marketing tool that to pay U.S. (including state) and/or Canadian
provides value beyond the capital raised. taxes on the entire amount of the capital
raised as opposed to using a more efficient
structure with fewer taxes paid in a more
tax-friendly jurisdiction.

State Preemption — Blue sky laws apply to

secondary trading.

No Investment Company — A company that

meets the definition of an investment company
cannot rely on Reg A+ (see below for further
detail on this point.)

10
Regulation CF for it with a 1-year lock-up period within secondary
markets.

The CF regulation provides projects with one of the

fastest opportunities for fundraising. However, the There are certain limitations to adhere to in terms
upper limit is just $1.07 million. Small startups that of investor status and relevant income.
do not require very high sums can absolutely go

Reg CF

Annual offer limit $1.07M

General solicitation Permitted with limits on advertising

Investor requirements Limitation based on annual income and net worth

SEC filing requirements Form C + two years of audited financial statements

Restriction on resale 12 months

Preemption of state registration Yes

The basic features of the CF regulation are as follows

Diverse Investor Pool accredited and unaccredited investors may participate

Limited Raising of Capital companies may raise up to $1.07 million

Transfer Restrictions investors can’t transfer securities for 12 months

Domicile the company must be a U.S. entity

Reporting Obligations the company must file an annual report

No Investment Company the company must not be an investment

11
Security Token Regulations within the The Maltese government has created a foundation
formed by legal entities with regard to the
European Union
above-mentioned bills. This solution was designed
Security token offering regulations in the European to discover STO technology and its potential. In
Union cover all EU countries. The EU Prospectus comparison with countries like the U.S.,
Directive is developed for projects that are going Switzerland, and Gibraltar, Malta not only requires
to distribute tokens. It requires registration. and compliance with KYC/AML verification procedures,
was designed under the Financial Services Action but their STO verification role is not limited to the
Plan to cover the EU in its entirety with one projects’ official documentation (White Paper,
regulation governing security token offerings.

Yellow Paper, etc.)

This directive was created to ensure investor The main competitive advantage of Maltese
protection on owned security tokens issued by a jurisdiction over others is that because it is an EU
blockchain startup. It provides a more secure, member, once a project is registered in Malta, it is
transparent, comfortable solution for startups to automatically compliant with other EU members.
attract investments while receiving confirmation
from a single financial regulator.

The Prospectus Directive is a flexible solution for

companies intending to launch a security token
offering. Registration in one EU jurisdiction can be
easily transmitted to other European countries. As
private token offerings are also compliant with this
regulation, they must be translated into each EU
country’s official language. Nevertheless, there
could be different exceptions in the financial
regulation for each EU member.

After submission of the prospectus registration

application, the financial authority of the chosen EU
jurisdiction sets the timeline for project verification
and deliverance. Depending on the prospectus
directive, the project’s bank account is not obliged
to be opened in the chosen jurisdiction, but it has
to be registered within the European Union.

STO Regulations in Malta

Malta is open for blockchain startups and digital

currencies, as its government understands global
recognition of the technology and the impact it will
bring.

Three bills have been developed by the Maltese

government for security token offering regulations:
the Virtual Financial Asset Act (VFA Act), the
Innovative Technological Arrangement and
Services Act (ITAC Act), and the Malta Digital
Innovation Authority Act (MDIA). They have been
designed for new structural development within
innovative blockchain technology.

12
 2
Investment
Professional Investor
Alternative Investor
UCITS SICAVs
Requirements Funds (PIFs) Funds (AIFs)
Administrator Flexible – May be Required – May be Optional – Manager Required by
required? delegated to an delegated to a third responsible for extension of
MFSA approved party administrator. administration, applicable fund
third-party in Malta. except if appointing license structure.
an MFSA approved
third-party.

AML Officer Required – May also Required Required Required

required? act as a compliance
officer.
Annual Scheme €2,000
Scheme €2,000
Scheme €3,000
Annual Company
Supervisory / Sub-funds: €600 Sub-funds: €600 Sub-funds: €450 Returns fee – €1,600
Annual Return
Fee
Application Scheme €2,000
Scheme €2,000
Scheme €2,500
SICAVs are subject
Fee / Sub-funds: €1,000 Sub-funds: €1,000 Sub-funds: €450 to a company
Registration registration fee of
Fee €1,750
Auditor Required Required Required Required – Annual
required? auditing of accounts.
Compliance Required – May also Required Required Required by
Officer act as AML officer. extension of
required? applicable fund
license structure.
Custodian Optional – Required Required – must be Required by
required? Safekeeping a licensed body extension of
measures must be sanctioned by the applicable fund
implemented MFSA. license structure.
Further The MFSA accepts Annual reporting Monthly statistical SICAVs are
Requirements service providers required. reporting to MFSA, established through
from recognised annual reporting the Companies Act
jurisdictions. required. (SICAV Incorporated
Cell Companies)
Regulations, 2010.
Minimum €100,000 €100,000 Third-party Dependent on fund
investment managed UCITS – type – e.g. minimum
€125,000 for PIF structured as
Self-managed
a SICAV – €100,000
UCITS – €300,000
Targeted Experienced Professional & Investors must have Retail/Professional
Investors investors Qualifying Qualifying investors satisfactory financial investors (typically
investors resources, and suited towards PIFs)
Extraordinary demonstrate – May be
investors relevant experience. incorporated as a
public or private
company.

2 https://icomalta.com/security-token-regulation/

13
STO Regulations in Switzerland

STO Regulations in Estonia

In Switzerland, security token offerings are When a blockchain project launches an STO in
attracting an increasing amount of attention from Estonia, it must be compliant with a number of
crypto investors and blockchain startups. applicable laws.

According to FINMA, all security tokens are asset

tokens. Swiss regulations affecting security tokens First of all, when a project intends to issue and
are designed to provide investors with relevant distribute security tokens, it must be compliant
information for making wise investment decisions.

with the Estonian Financial Supervision Authority,

which requires registration of the prospectus.
FINMA also defines security tokens as There are a few exceptions to this regulation.
standardized, certificated or uncertificated Prospectus registration is not required if the
securities, derivatives, and intermediated securities.

project meets any of the following conditions:

Tokens distributed by blockchain startups and security tokens will be distributed exclusively
defined as securities are standardized for trading between qualified investors

and can go public if they are not issued to separate the securities offer is provided to 150 investors
crypto investors. or less, except for qualified investors

the securities offer is addressed to investors

STOs are Regulated by FINMA, the Swiss who purchase securities at a total cost of at
Financial Market Supervisory Authority
least 100,000 euros for each investor and each
FINMA provides legal requirements regarding individual offer

STO campaigns in Switzerland

securities offers with nominal/book value must

equal at least 100,000 euros per security

FINMA Released Guidelines in 2018 Which securities offers must have a total remuneration
Categorizes Tokens into 3 Groups
of 2.5 million euros or less for all contracting
It is specifying tokens in three main groups: states in the amount calculated for one year.
payment tokens (means of payment), utility
tokens (grant access to the application or If a project doesn’t meet the above-mentioned
service) and asset/security tokens (represent conditions, its offer is defined as a public offer, and
actual assets like dividends, profits, or interest).

the project must register its prospectus with the

EFSA.

According to FINMA, Security Tokens are

Subject to the Same Regulations as Other There are a few countries in the EU that don’t
Securities such as Stocks, Bonds, and require a prospectus. For example, if a security
Derivatives
token is issued in the Czech Republic, a prospectus
Launching an STO campaign, the company has is not necessary if the total value of issued
to be compliant with the same laws, as stocks, securities does not exceed 1 million EUR (1.5 million
bonds, or derivatives. A failure to comply with EUR in Luxembourg, 2.5 million EUR in Poland and
these laws can result in punishments.

Sweden, and 5 million EUR in Croatia, Spain, and

the U.K.). The new Prospectus Regulation states
STOs are Subject to KYC Laws
that if the issuer is raising up to 8 million EUR, the
The KYC verification avoids the fraud and helps country of issuance can decide whether or not the
regulators to do their job.

issuer needs to issue a prospectus.

STOs are Also Subject to the “Big Five” Swiss
Banking Regulations

These regulations are the Stock Exchange

Regulation Act, the Anti-Money Laundering
(AML) Regulations, Banking Regulations,
Financial Market Infrastructure Regulations, and
Collective Investment Scheme Regulations. If the
project aims to launch an STO campaign, it has
to be compliant with all these regulations.

14
The Most Friendly STO Jurisdictions As a benefit for ICO/STO companies that meet
certain qualifications, the Israeli government is
Generally, selection of the most friendly STO providing flexible taxation. Furthermore, these
jurisdiction depends upon the country’s certainty benefits will increase if companies are less
that STO legal aspects will be respected. According developed economically. These areas include
to current market information, most countries regions in the north and south of Israel as well as
around the world provide either restrictions or Jerusalem. In these cases, tax rates could be
strict laws that work to prevent fraudulent projects. decreased up to 6% (in comparison to 12% and
Nevertheless, there are a few jurisdictions that 23%).

provide a friendly environment and flexible

regulations regarding STOs and blockchain STO Regulations in Singapore

startups.

The government of Singapore offers a

STO Regulations in Lithuania

friendly-enough policy toward companies planning

to launch Security Token Offering campaigns.

Lithuania is becoming the main fintech hub in the

EU that attracts blockchain-based companies. It According to market information, in the first
has accomplished a huge amount of work in the quarter of 2018, there were 11 successful Token
STO field in terms of compliance and regulation. Generation Events registered in Singapore, in
The Ministry of Finance of Lithuania has developed comparison to 10 in Switzerland and 6 in the U.S.

multi-institutional interpretations for the companies The Monetary Authority of Singapore (MAS) has
hoping to launch STOs in the areas of taxation, developed a regulatory sandbox designed
compliance with European Union financial primarily for companies that work with innovative
regulations, and accounting.

technologies.

Lithuanian governmental authorities like the The Guide to Digital Token Offerings, designed by
Ministry of Economy and the Ministry of Finance the MAS, equates digital tokens with shares or
have approved and are supporting the DESICO bonds so their regulations can be compliant with
project, which is developing a platform that will the Securities and Futures Act. In this case, a
provide a full package of STO-related services to company planning to launch an STO passes a
blockchain startups. The DESICO platform will be traditional registration process with the Monetary
operating under Lithuanian regulations in France, Authority of Singapore through registration of a
as well, and will provide the ability not only to issue prospectus.

securities, but also to trade them in compliance

with European Union regulations.

There are few exceptions to prospectus

registration, which are as follows:
STO Regulations in Israel

The size of the issue does not exceed 5 million

Nowadays, Israel is becoming a very attractive U.S. dollars within 12 months.

location for blockchain companies that are There are fewer than 50 persons in private
developing cryptocurrency exchanges and placement within 12 months.
launching token generation events. Its government
is providing a huge amount of support for
innovative technology and hopes to become a
“crypto hub”.

A few government authorities, such as the Israeli

Anti-Money Laundering Authority, the Israel Tax
Authority, and the Israel Securities Authority (“ISA”)
that provide regulations for Security Token
Offerings. Any project planning to launch an STO
campaign must be compliant with Israel’s security
laws.

15
Security Token Standards

Security tokens can be deployed under different Token disposal, fee payment, and commissions can
token standards within the campaign launch. As be conducted in ETH, BTC, or fiat. In this case,
long as a token is backed up by real-world value, it investors can purchase tokens according to the
is considered to be a security.
ERC standard and transfer crypto or fiat payments
Ethereum-based tokens following ERC standards into the STO’s wallet.

can be used during the security token offering.

ERC token standards are unified, playing the role of

ERC Token Standards crypto-asset, digital currency, and shares. It should
be stressed that they are compliant with the
Since the ERC standard is the most adopted and required address format, and serve as shares. This
widely used in the crypto community, let’s review provides the possibility of gaining income from
its characteristics.

future dividends. Stakeholders can take part in the

company’s management processes controlling
ERC token standards are developed on top of the token transfer, consumption, and maintenance.

Ethereum blockchain. This platform is capable of

storing transactions, and acts as a VM (virtual Nowadays, there are several security token
machine) to encode and execute smart contracts. standards, that can be used for a Security Token
ERC token standards simplify project development Offering, including the ST-20 token, which was
by creating a decentralized environment and developed by the Polymath; the R-Token,
network functionality optimization.

developed by the Harbor; and ERC standards like

ERC1400, ERC1404, and ERC1410, which were
Ethereum-based tokens have the advantage of proposed by the crypto community.

being able to represent an entire project or

technology. These assets can be created for The description presented below provides a brief
security token offerings based on an Ethereum understanding of these standards and the
smart contract. The company is then able to differences between them.
conduct a token offering to raise capital for project
development.

16
ST-20 Token Standard

opportunity to use additional modules in the

VerifyTransfer function.

The ST-20 token standard was developed by the

Polymath team, and represents the same ERC-20 VerifyTransfer is the most significant function in the
token standard, with the supplemental feature of ST-20 token standard, and includes the following
obligatory certification for both individual investors modules:
and institutional investors.

Whitelisting support

It allows investors to be compliant with Blacklisting support

governmental regulations while participating in Transfer limit settings

Security Token Offerings. Furthermore, it offers the Restrictions on token transfers

The SecurityToken ST20 is an implementation of Security Token Offering (STO) modules:

the ST-20 protocol that allows the addition of A SecurityToken can be attached to one (and
different modules to control its behavior. only one) STO module that will dictate the logic
Different modules can be attached to a of how those tokens will be sold/distributed. An
SecurityToken:

STO is the equivalent to the Crowdsale contracts

often found present in traditional ICOs.

TransferManager modules: These control the

logic behind transfers and how they are allowed Permission Manager modules: These modules
or disallowed. By default, the ST (Security Token) manage permissions on different aspects of the
gets a GeneralTransferManager module attached issuance process. The issuer can use this module
in order to determine if transfers should be to manage permissions and designate
allowed based on a whitelist approach.

administrators on his token. For example, the

issuer might give a KYC firm permissions to add
The GeneralTransferManager behaves differently investors to the whitelist.

depending who is trying to transfer the tokens.

Checkpoint Modules. These modules allow the
a.

In an offering setting (investors buying tokens issuer to define checkpoints at which token
from the issuer) the investor's address should balances and the total supply of a token can be
be present on an internal whitelist managed consistently queried. This functionality is useful
by the issuer within the for dividend payment mechanisms and on-chain
GeneralTransferManager.
governance, both of which need to be able to
b. In a peer to peer transfer, restrictions apply determine token balances consistently as of a
based on real-life lockups that are enforced specified point in time.

on-chain. For example, if a particular holder

has a 1-year sale restriction for the token, the Burn Modules. These modules allow issuers or
transaction will fail until that year passes. investors to burn or redeem their tokens in
exchange of another token which can be on
chain or offchain3.

3 https://github.com/PolymathNetwork/polymath-core

17
R-Token Standard

TokenRegulatorService is the default approach for

whitelisting. Permissions affecting participants and
The R-Token was developed by the Harbor team, token transfers can be utilized in various
and includes transfer() and transferFrom() methods combinations for compliance with government
from the ERC20 token standard. Additionally, it has regulations. There is also the ServiceRegistry
implemented a check feature for token transfers. mechanism, designed to make the process of
The check() function can be presented in different R-Token upgrade easier. Regulations are changing
forms, but the solution designed by according to market needs.

Components Features

RegulatedToken: Configurable without code modification and

need for more security auditing

Permissioned ERC-20 smart contract Upgradable so an owner/admin can change

representing ownership of securities
business logic as rules evolve over time

Compatible with existing wallets and An owner/admin can lock/unlock trading for a
exchanges that support the ERC-20 token period of time

standard
An owner/admin can whitelist/blacklist partial
Overrides the existing ERC-20 transfer method token transfers

to check with an on-chain Regulator Service An owner/admin can qualify/disqualify a trade

for trade approval participant from sending tokens

An owner/admin can qualify/disqualify a trade

4
RegulatorService: participant from receiving tokens

Contains the permissions necessary for

regulatory compliance

Relies on off-chain trade approver to set and

update permissions

ServiceRegistry:

Accounts for regulatory requirement changes

over time

Routes the R-Token to the correct version of

the Regulator Service

ERC1400 Token Standard

MUST have a standard interface to query if a

In the ERC1400 contract, token transfers are transfer would be successful and return a
separated into several sections. In this case, there .

reason for failure

is the ability to provide restrictions on: MAY be able to modify metadata at time of
transfer based on off-chain data, on-chain
dividends
.

data and the parameters of the transfer

voting processes
MAY require signed data to be passed into a
j
other functions, not ust restrictions on transfer transaction in order to validate it
addresses. .

on-chain
MUST be ERC20 compatible.

Below are outlined the requirements for a ERC1400 SHOULD be ERC721 compatible.

SHOULD be ERC777 compatible .

5
token standard agreement :

4
:
https //github.com/harborhq/r-token

5 : I 4
https //github.com/ethereum/E Ps/issues/1 00

18
ERC1404 Token Standard

The specification for this metadata, beyond the

existence of the _partition key to identify it, does
The ERC1404 token standard took over the not form part of this standard. The token holders
competitive advantages of the ERC20 token address can be paired with the partition to use as a
standard with the implementation of a few metadata key if data varies across token holders
enhancements in restrictions on token transfers. with the same partition (e.g. a "restricted" partition
The ERC1404 token standard has two main may be associated with different lock up dates for
implemented functions: each token holder).

detectTransferRestriction
For an individual owner, each token in a partition
This implemented function provides the issuer therefore shares common metadata.

with the ability to develop restriction logic for

token transfer.

Token fungibility includes metadata, therefore, we

have:
messageForTransferRestriction

This implemented function provides an for a specific user, tokens within a given partition
explanation with a message to the token holder are fungible

about why the token transfer is being restricted. for a specific user, tokens from different
partitions may not be fungible
In order to be compliant with the securities laws,
the issuer will have to restrict the ERC20 token It is important to note that partitions with the same
transfers. The further motivation for ERC1404 bytes32 key across different users may be
token standard utilization includes: associated with different metadata depending on
the implementation.

Enforcing Token Lock-Up Periods

Enforcing Passed AML/KYC Checks

Token Specifications:
Private Real-Estate Investment Trusts

Delaware General Corporations Law Shares6 a anceOf. Aggregates a token holders

b l
balances across all partitions. Equivalent to
balanceOf in the ERC-20/777 specification.
MUST count the sum of all partition balances
ERC1410 Token Standard

assigned to a token holder.

The ERC1410 token standard offers balanceOfByPartition. As well as querying

partially-fungible features, and is presented as an total balances across all partitions through
extended version of the ERC777 token standard. It balanceOf there may be a need to determine
provides an interface that supports numerous the balance of a specific partition. For a
sections for grouping passes. In this case, each given token holder, the sum of
grouping pass requires a key identificator and a balanceOfByPartition across partitionsOf
balance to provide limitations from the operational MUST be equal to balanceOf.

side.

partitionsOf. A token holder may have their

A Partially-Fungible Token allows for attaching balance split into several partitions
metadata to a partial balance of a token holder. (partitions) - this function will return all of the
These partial balances are called partitions and are partitions associated with a particular token
indexed by a bytes32 _partition key which can be holder address.

associated with metadata on-chain or off-chain.

totalSupply. Returns the total amount of
tokens issued across all token holders and
partitions. MUST count all tokens tracked by
this contract .
7

6
https://github.com/ethereum/EIPs/issues/1404

7 https://github.com/ethereum/EIPs/issues/1410

19
Non-ERC Token Standards
In addition to traditional ERC tokens, other
blockchain tokens can be used in the context of a
security token launch. As mentioned above, the
main feature these token must possess is backup
by real-world value.

Stellar XLM

Stellar XLM, for instance, is one of the examples

utilized in the STO process. Its protocol is on the
path of moving towards legally-compliant STOs.

DSTOQ, for example, which is a licensed stock

exchange, recently launched a P2P marketplace for
security tokens on top of the Stellar protocol.

In contrast with such platforms as Polymath or

Civic, Stellar was created to eliminate Ethereum’s
limitations and provide:
added AML requirements

issuance of tokens by crypto-beginners

limited access to token ownership

Implementation of KYC requirements

EOS

EOS is an open-source blockchain platform for

decentralized applications, that had launched its
mainnet in summer 2018. It has designed the
Financial Security Protocol, that allows the
deployment of EOS-backed security tokens.

Security tokens, that are designed by the EOS, can

compete with the Ethereum based ERC1400 token
standard, but includes additional modules for more
efficiency:
fsp.security is responsible for issue, transfer and
life-cycle management of securities

fsp.regulator acts as a gate-keeper of the

protocol, setting up a certain set of rules

fsp.exchange provides a point of liquidity for

instances of fsp.security

fsp.registry is responsible for KYC / AML checks

and verification

fsp.communication is responsible for processing

communication within the protocol

8 http://bit.ly/eos-enters-the-security-token-scene

20
The STO Ecosystem
To dive deeply into an STO ecosystem, it is crucial
to understand the process of a security token
The STO Launch Process
offering launch as well as the parties involved in the The entire STO timeline commonly lasts for
process.

approximately one year, including four major

stages of preparation.

First, the company planning to issue securities

needs to understand their reasons for tokenization. When a company or project starts preparing a
Benefits include the following: security token offering, it is important to keep in
mind that the process of preparation may last for
high degree of asset fractionalization
six months and include the following:
high liquidity

low fees
team formation (advisor/lawyer/legal counsel
increased market acceptance and efficiency hiring)

pre-listing preparation (structuring the STO)

The main advantage lies in access to a capital pool. security token creation (issuance and technical
Considering the fact that security tokens can be platforms)

purchased and sold globally in accordance with defining and implementing the marketing
relevant regulations, their price is set in a fair and strategy; roadshow travel for investor
reasonable way so as to be attractive stakeholders. engagement
SEC compliance provides a solid, secure campaign
structure and appeal in terms of technological
innovation.

Process

Conducting a roadshow (3 months) and other

Roadshow marketing campaign for both traditional and crypto
investors

Carefully select suitable issuance platform (1

Security Token Creation month) to onboard your token

Working with advisors and legal counsel

Pre -Listing preparation (2months) on structuring the offering, and creating
marketing materials

Form a team of experts (6 months) by hiring

Team Formation advisors, lawyers, engaging with issuance platform,
and check with related requirements

21
Team Formation

Сommonly, the first stage of any token sale is a

private sale. The main audience for the private sale
This stage commonly takes the most time: about is investors. Therefore, it is crucial to prove to
six months. It is important to form a team of true potential investors that the project will solve a
experts in order to ensure smooth project range of issues in the current market, has novelty
execution.

in its approach, and promises to fulfill its goals and

intentions. An integral part of this process is
The team should include diverse members from a providing investors and venture capitalists (as well
range of various industries: legal, marketing, as the community) with precise business-plan
business development, financial (accounting), and development, which must be included in the white
so on. Consultancy with all the above-mentioned paper.

members guarantees the proper trajectory of

project development.

The business plan outlines the company’s road to

the achievement of set goals and tasks. It is
The legal aspect is especially important in terms of necessary to understand the operational model
choosing the right regulatory basis for security and its monetization activities. This includes target
token compliance and following the rules of the market evaluation, estimation of market share, and
appropriate jurisdiction.

the company’s projections in terms of future

revenue, expenditures, and total profit.

During this stage, it is also time to research the

issuance platforms that will serve all user, company, Our recommendation is to think about the following
and investor needs.

definitions in the business-plan development:

Pre-Listing Period, STO Structure

the company’s business model, use cases, and

unique value

Taking into account expert feedback, this stage, the target market with market-share projections

which takes approximately two months, involves the financial model with key projections (e.g.,
preparation of structure, marketing strategy, and revenue, OpEx, CapEx, and profit).
the PR campaign.

Token Creation

White-Paper Creation

As long as the legal aspect is clarified and the

The white paper is an integral document for any marketing strategy is implemented step by step,
security token offering. It summarizes company the company can start focusing on token creation.

information, goals, and intentions within the current

market and outlines the technology with which the The company must make a decision concerning
project will reach its goals. It should mostly focus the issuing platform. As of today, there is a range
on the solution and outline full company of platforms to choose from. A list is presented
information for investors. below. In the Polymath example, the token creation
can be divided into the following points:

22
1.

Register token symbol. In this step, the token Website Development

name and token symbol will be reserved for 15 The website is the seed point of the marketing
days. Creation of the token should be done strategy, as it is the place where trust is built and
within the time limit.

where potential investors decide whether or not

to invest.

2.

Choosing providers. There is a range of

partners, including advisory, the legal team, Search Engine Optimization

KYC/AML providers, and the marketing team, Correctly-performed SEO ensures a

which offers help to the STO.

cost-effective, long-term source of targeted,

interested traffic.

3.

Token creation. Additional information, such

as websites or a legend, can be added. After Media Outreach and PR

that, token issuance can be completed.

This section of the marketing plan should include

press releases, guest posts and articles, and coin
4.

Detailing the offering. Here are some details listings on ICO rating resources.

that should be considered:

Email Marketing

Start/end date: inform potential investors of This marketing campaign should be conducted
the time period for investment.
very carefully, as sending individual/personal
Accepted payment: state if the token is emails too often or without a concrete content
being raised in POLY or ETH
could be defined as spam.

Hard cap: state the maximum amount of

money that will ideally be raised.
Social Media and Community Marketing

Rate: state the percentage of POLY or ETH Social media and community management is a
at which the token is valued. crucial part of any successful ICO marketing
plan. This part should include posting
5. Whitelisting investors. Whitelisting allows information on the project updates on free
investors to participate in the STO. When resources like Reddit, Facebook, and Twitter,
investors send POLY or ETH token to the STO specialized forums, Quora discussions, etc.

contract, the company’s token will be given to

them. The whitelist can be updated at any Bounty Campaigns

time during the STO. Bounty programs also play an important role in
marketing campaigns, as they provide incentives
Marketing Strategy Implementation

and rewards that can be used for the future.

All of the mentioned-above activities can easily

A strong marketing plan is a crucial point for guarantee additional trust for the project from
project development. A project can have a very the crypto community. In addition, the marketing
useful and necessary product, but without the right plan should include roadshow details and goals.

marketing plan, it could easily fail. Choosing the Keep in mind that different regulations have
correct marketing strategy will lead the project to different approaches to marketing strategy, and
success.

certain information should not be revealed

publicly. It is important to comply with the rules
In terms of the marketing campaign, it is important of the appropriate jurisdiction.

to introduce the security token to the community.

Identify its structure and properties, provide Security Token Sale

additional information about the team, and

propose the white paper. All of this should be When everything is done and tokens are being
delivered via the correct marketing channels and offered to the community, the company should
social platforms for the appropriate audience.
provide their support to investors and and keep
Keep in mind the following marketing-plan them updated on the latest changes. This will
elements: ensure a trustless relationship between the
company and investors.

23
Major Technology Players
Having discussed the main stages of the STO the STO ecosystem, as they provide the framework
launch, let’s take a closer look at the major for legal aspects, the KYC and AML verification
technology players. processes, development, and deployment of
token-flow infrastructure.

Token Issuers
Below is a brief description of the leading agencies
Security Token Issuers form a significant share of forming the security token ecosystem.

TokenGear is a full-fledged solution for customized

launching of token offerings with a user-friendly
configurative interface, scalable payment system,
and KYC verification system.

WeOwn is a blockchain-based financial asset

tokenization platform designed to provide
significant benefits to equity capital markets
through disintermediation of legacy market
practices.

Neufund provides an end-to-end solution for asset

tokenization and issuance.

Abacus is an administration platform for tokenized

securities.

Securrency offers clients a streamlined issuance

process, global identity and wallet proofing, and an
API and abstraction layer in addition to an
enhanced liquidity model.

The Tokeny sale platform allows companies to

focus on their business concept, marketing, and all
the other aspects of their ICO or STO without
needing to be concerned with any of the technical
challenges.

24
 Securitonomy allows the complete issuance and
management of tokenized securities, and is based
in Malta, one of the industry’s most progressive
jurisdictions.

Agencies advisories, technical development services,

consulting, and marketing campaigns. They make
Blockchain agencies can provide services like legal up a vast section of the STO ecosystem.

Applicature is blockchain development agency that

works on projects in the blockchain industry
involving the development of smart contacts as
well as theresearch, deployment, and
customization of blockchain solutions. Applicature
is a technical advisory to blockchain companies
and technical consultancy on token offerings.

New Alchemy is a strategy and technology

advisory group specializing in tokenization on the
blockchain. It is one of the only companies able to
offer a full spectrum of guidance, from tactical
technical execution to high-level theoretical
modeling.

AmaZix offers professional crypto ICO consultants

with technical expertise who provide excellent
support and are led by an elite team of managers.

Protos is a financial advisory and

asset-management firm focused on the blockchain
sector.

Fluidity provides technology services to registered

broker-dealers, issuers, and financial institutions for
tokenized securities.

25
Exchanges part of the ecosystem as a whole. Consider the list
below before choosing a final option for listing
Security Token Exchanges provide token access services.
while ensuring that liquidity remains an integral

Bancor Protocol is the standard for the creation of

Smart Tokens: cryptocurrencies with direct, built-in
convertibility through smart contracts. Bancor
utilizes an innovative token “connector” method to
enable formulaic price calculation and continuous
liquidity for all compliant tokens without needing to
match two parties in an exchange.

Blocktrade.com is a top-tier trading facility for

security tokens, crypto assets, Crypto Traded
Indices, and other tokenized assets.

iSTOX is a future-ready capital market platform set

to usher in a new era for capital fundraising
through the use of Security Token Offerings
(STOs). As a flexible, inclusive and efficient capital
market platform, iSTOX will greatly benefit
companies looking to raise capital and investors
seeking bespoke investment opportunities.

The KoreProtocol is a tool for tokenized securities.

It is a multi-jurisdictional protocol that has been
designed for the protection of investors, issues,
and other participants in private capital markets
around the world.

LCX, the Liechtenstein Cryptoassets Exchange, is a

blockchain ecosystem for professional investors.
LCX provides crypto custody service called LCX
Vault, a crypto trading desk called LCX Terminal,
an advanced trading platform for security tokens
and other cryptoassets called LCX Exchange, and
an international fiat-to-crypto exchange called
Binance LCX, which is a joint venture with Binance.

Ledgity is a platform and mobile application fully

dedicated to security tokens, from issuance to
peer-to-peer exchange. All users finally have
access to a technology that is 100% compliant with
applicable laws and regulations governing security
tokenization.

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 "The Malta Stock Exchange [MSX] became a
reality upon enactment of the Malta Stock
Exchange Act in 1990, and commenced its trading
operations on 8 January 1992." As of September 11,
2018, Malta has signed a Memorandum of
Understanding with leading crypto exchange
Binance to jointly develop an exchange for security
token trading.

OpenFinance Network seeks to offer a U.S.

securities regulation-compliant trading venue for
security tokens followed by a "full process
platform" that includes issuer templates for
security tokens as well as "advanced investor
tools."

STOKR will be a crowd investment platform

powered by the Ethereum blockchain to create
independent access to new capital markets.
Through EU-compliant security token offerings
(STOs), everyday investors can directly fund
innovative start-ups and SMEs in return for a share
of the venture’s future profits.

Templum seeks to offer both a platform for the

initial sale of security tokens and an exchange for
subsequent trading on the secondary market.

tZero is building an exchange platform that seeks

to offer traders access to the security token
secondary market by providing encrypted
accounts, a trading venue, and clearing/settlement
services.

VRBex plans to be the premier exchange for

investors seeking to exchange or trade
cryptocurrency and to invest in crypto-assets such
as security tokens.

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Launching with TokenGear
TokenGear is a full-fledged solution for customized also an escrow-based solution: FundGuard.
launching of token offerings with a user-friendly Milestone-based money flow reduces the risk of
configurative interface, scalable payment system, inadequate funds while a smart contract makes
and KYC verification system. All movement on the transactions safe and easily trackable for both
platform requires just a few clicks to be fulfilled. In investors and founders.

order to fully understand platform functionality,

let’s investigate TokenGear from different 2. Registration process. In order to become an
perspectives: user and admin. active participant on the platform and be
granted rights for further transactions, users
User Dashboard need to go through a 3-step verification
process:
1. Milestones. The contribution dashboard is
easily adjusted according to user Registration or signup

requirements. The user has the ability to view Passing KYC

project milestones. In order for investors to Contribution

effectively manage their investments, there is

About the Project KYC Verification

Before passing KYC, users need to learn more With KYC integration functionality, the system
about the project. The platform allows viewing of ensures the selection of trustworthy contributors
the project’s description with all necessary details to prevent fraud and any illegal behavior. After
for further interaction with team members. filling out the required identification information,
users can be verified automatically by choosing a
third-party provider, or data can be manually
confirmed or declined by an admin.

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FAQ & Contact Section communication with the team. FAQ and contact
integration are alternatives for support and
Users can choose an appropriate means of interaction between parties.

29
Contribution Flow

Once the KYC verification process is complete, the

next step is contributing funds and getting tokens. The user chooses the

The platform offers multiple payment methods to payment options

facilitate the payment procedure for each user.
There are various options for
contribution:cryptocurrencies, FIAT, the Shapeshift
payment method, bank wire transfers, or
payment-processing companies.

Users choose the payment option >>> TokenGear TokenGear generates the
generates the transaction data >>> tokens are sent transaction data
to the user’s wallet.

Through the smart-contract suite, rewards are

adjusted within seconds.

In this section, the contributor can view the current The tokens are sent to the

state of the token sale and track completed user’s wallet

transactions and available token balance for
his/her account automatically after successful
payment.

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Admin Platform distribution in coins, sold tokens,etc.

Dashboard

Statistics reflecting data for the number of tokens

sold over a certain time period are provided in the
The functionality of the admin panel allows format of a time chart. This option is a valuable tool
wide-ranging opportunities for easy, smooth for marketing teams in terms of integration of data
contribution management. There is a multitude of for promotional activities.

additional modules for better user engagement.

Project members can analyze the current situation Contribution statistics by country are provided in
by viewing analytical data with statistics diagrams the form of a heat map. Admins can get data in the
& charts reflecting the state of contributions by following formats:

Contribution statistics by country are provided in Admins see top investors and the overall number
the form of a heat map. Admins can get data in the of registered members and fulfilled transactions,
following formats: including detailed data on the KYC verification
process.
Contribution amount

Average contribution amount per contributor

Average contribution USD amount per

contributor

Contributor count

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User Management

In the user dashboard, one can filter users by KYC

and Proof of Income, view KYC status, and carry
out manual verification.

32
Transactions

get the picture of who contributed to a project and

when. Admins are also granted the right to
This functionality allows viewing of the full download CSV files for analysis and assessment of
transaction history, details, and the current state of data. This option allows viewing of statistics for
any given transaction. Users can see all completed further analytical research based on transaction
and pending transactions. With TXHashes, users completeness.

33
Invoices

automatically receive financial data and see

operations conducted on the account. The owner
This procedure is conducted manually by filling out of the bank account is attached to a specific
all information about contributions made through cabinet dashboard, and manages the process by
invoices and manually verified.

inserting data from the bank involving the

contribution amount. This takes place with a
Admins supervise compliance with bank accounts, reference ID to perform automated calculations
manually filing the received amount. There is an and approve transactions.
option to tie bank accounts in order to

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Features

Admins create a list of frequently-asked questions

which can be then managed: change sorting, edit
FAQ content, save and remove lists.

Milestones The user adds a list of milestones for investors,

providing the following information: name, amount,
and position.

35
Email Management System The system manages emails, creating templates of
the letters for different contributors. This system
also provides trigger events.

About Us

providing it in different formats (tables, links,

videos, etc.) before previewing changes on the
In this section, admins can edit all information product page.
about the project and customize the content,

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Settings General information contains: project name,
default location, default timezone, terms &
conditions, YouTube URL link, and privacy policy.

Look and Feel – Project teams can customize interface functionality, admins are able to integrate
project environment on the platform according a landing-page website with a TokenGear
to their visions, tastes, and moods. With custom contribution dashboard.

37
There are plenty of options for creating the ideal theme, style, and background. All that is required is
dashboard by managing the layout of menu a few clicks and a couple of minutes to customize
navigation and modifying colors and gradients for the dashboard.

Contributions – Members need to set their to the BTC wallet. There is also a section for
wallet addresses to receive the crypto coin setting information about FIAT invoices. Users
amount. ShapeShift integration allows them to search for the required currency and select it as
receive approximately 72 coins, which are sent the payment method.

38
Benefits of the dashboard include a user-friendly tokens. For example, users can pay for tokens with
interface with the flexible ability to simply purchase EtherWallet or Metamask.

If a user tends to pay in USD, he/she needs to identification data about the individual will
pre-fill the information from the KYC verification by automatically be filled in certain fields.
checking it off. From that point forward, all

39
Thank you for reading! Want to get more updates

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