What is a Security Token Exchange? - Crypto app factory
When a token is subjected to federal security regulations and can derive its value from an external, tradable asset, it is categorized as a security token. It is true that the process can seem complicated, but there are a lot of benefits with a security token issuance. Tokenizing securities improves the liquidity of underlying assets which can engage more investors. Security tokens also come up with other benefits like increased market efficiency, lower issuance fees and fractionalization of larger assets. If a startup meets the required regulatory obligations, the security token offering can create a vast potential for the variety of applications. Two types of Security Token Exchange: (1) Utility Tokens: These type of tokes are used for creating Initial Coin Offerings ( ICO ) for raising funds. These tokens does not equate to a share in the company, but can be used to facilitate a particular event, transaction or value in the operations of the company. Eg: ETH
