Short view of different forms of STO’s
Any traditional security, including an equity interest in a company, a limited partner interest in a venture capital fund, and a range of other debt- and equity-like instruments, potentially can be issued as a tokenized security. In addition, tokenized securities can also be asset-backed, representing interests in real estate or fine art, among other assets. Further, the SEC and its staff (the “Staff”) concluded that tokenized securities include interests in decentralized autonomous organizations.
Blockchain Capital is thought to have conducted the first offering of tokenized securities, also known as a security token offering (“STO”), when it raised capital for its Singapore-based fund pursuant to Regulations D and S under the Securities Act.
INX Group did the first-ever Full F1 SEC-registered initial public offering of a security token on the blockchain. “The INX Token” in which INX raised $83 million from more than 7,200 retail and institutional investors worldwide. It took INX over 950 days to bring the INX Token to market.
Common exemptions from STO registration:
- Full F1 (Sec. 6 Sec. Act.) for U.S. Based and International investors
- Reg D (Rule 506(c) or 506(b)): Private Placement, generally only accredited investors
- Reg A/A+: Mini-IPO, requires SEC to qualify, limited to $50M if Tier 2
- Reg CF: Regulation Crowdfunding, limited to $1.07M
- Reg S: International investors ONLY