Blockchain Academy
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STO has the characteristic of stocks that the token given to investor works similar to a stock, and the capital is regulated by the securities and exchange act under the state. A security token, which is a token from STO, resembles a traditional stock and represents the ownership of issuer. Depends on the number of the security token possessed, it is possible to receive the profit of issuer as a dividend or to own the right of management.

This is the difference from the traditional ICO, in which the investors can't demand a dividend from the profits of issuer but only can to buy their products or blockchain based services usually with 'utility token'. The token works only as for the payment purpose rather than the marketable securities.

There are two types of STO.

One of the types is an equity offering type, which issues token that works as the financial investment instruments, issued under Korean capital market act, article IV and V such as equity security, debit security, and investment contract security. In case of using it as a financial purpose only, it is similar to the traditional ICO. The equity offering type STO should have a business model to return the actual profits to their investors.

The other type is an asset-backed securitization type, which issues tokens for the asset-backed securities(ABS) without liquidity such as real estates or art pieces. Thus its purpose is the asset liquidization or dispersed ownership of assets of high value assets. is an example of the asset-backed securitization type. Like in the example, after buying tokens in i-house, it is possible to invest on divided real estate and share the profits from the particular part with other investors.