STO (Security Token Offering)

An STO is the issuance of tokens that are transferable securities, subject to securities markets law.

What is it? - Dummies

An STO is like an IPO, but in a blockchain version. Instead of handing out paper shares, the company issues digital tokens that represent a real stake: a share, a slice of debt or an economic right. Because these are genuine investments, they play by the serious rules of the stock market, not by the loose rules of unregulated crypto.

What is it? - PRO

An STO (Security Token Offering) is the issuance and offer of tokens that constitute financial instruments (typically transferable securities) represented through distributed ledger technology.

Because these are financial instruments, an STO is subject to securities markets law: MiFID II Directive 2014/65/EU, MiFIR Regulation (EU) 600/2014 and, in Spain, Ley 6/2023 (BOE-A-2023-7053). It is not governed by MiCA Regulation (EU) 2023/1114, which excludes financial instruments under Article 2(4).

Key points

Issuance of tokens that are financial instruments (transferable securities).
Governed by MiFID II, MiFIR and the LMVSI, not by MiCA.
Usually requires a prospectus or securities information document.
Differs from an ICO, which offers non-financial crypto-assets.

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