{"id":6682,"date":"2020-01-18T12:16:34","date_gmt":"2020-01-18T12:16:34","guid":{"rendered":"https:\/\/qa-front.dev.techhub.cloud\/blog\/?page_id=2953"},"modified":"2026-02-17T10:32:44","modified_gmt":"2026-02-17T10:32:44","slug":"what-is-an-sto","status":"publish","type":"glossary","link":"https:\/\/paybis.com\/blog\/glossary\/what-is-an-sto\/","title":{"rendered":"STO"},"content":{"rendered":"<p><span style=\"font-weight: 400;\">The world of cryptocurrency is changing fast. New terms and offers keep hitting the market and the latest to join in the STO.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">In this article, we\u2019ll talk about the STO and explain what it\u2019s all about.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Let\u2019s get started.\u00a0<\/span><\/p>\n<h2><b>What Is an STO?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">Short for Security Token Offering, STO refers to the process of issuing a token or crypto coin to an investor. These tokens fall under securities and <\/span><a href=\"https:\/\/www.ccn.com\/what-is-an-sto\/\"><span style=\"font-weight: 400;\">are linked to an asset <\/span><\/a><span style=\"font-weight: 400;\">just like stocks and bonds.<\/span><\/p>\n<p>While many STOs utilize Ethereum&#8217;s ERC-20 standard, some platforms also support the\u00a0<a href=\"https:\/\/paybis.com\/blog\/glossary\/bep-20\/\">BEP-20 token standard<\/a>\u00a0on Binance Smart Chain for lower transaction costs.<\/p>\n<h2><b>STO vs ICO &#8211; Understanding the Differences<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">An STO appears quite similar to an ICO. You cannot understand what is an STO without first getting an understanding of how ICOs work.<\/span><\/p>\n<p><span style=\"font-weight: 400;\">Technically speaking, the process is the same for both token sale models. However, the token characteristics are very different. STOs are fully backed and comply with relevant regulations. On the other hand, most ICOs present tokens as a utility coin that offers users access to <\/span><a href=\"https:\/\/paybis.com\/blog\/what-is-dapp\/\"><span style=\"font-weight: 400;\">decentralized apps<\/span><\/a><span style=\"font-weight: 400;\"> or the native platform. Issuers argue than coins are for use and not investment. This is why ICO platforms are able to circumvent legal issues.\u00a0<\/span><\/p>\n<p>Many STOs are built on the Ethereum blockchain due to its robust smart contract capabilities. If you&#8217;re interested in participating in the STO ecosystem, you can\u00a0<a href=\"https:\/\/paybis.com\/buy-ethereum\/\">buy Ethereum<\/a>\u00a0to interact with these tokenized securities.<\/p>\n<p><span style=\"font-weight: 400;\">Here are some major differences:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">ICOs face fewer barriers to entry whereas, STOs <\/span><a href=\"https:\/\/medium.com\/@Alt.Estate\/legal-aspects-of-security-token-offering-sto-8e8fdfae307e\"><span style=\"font-weight: 400;\">can be tough to launch<\/span><\/a><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">STO tokens are backed by assets but ICO tokens have no collateral<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">STOs tend to be more cost-effective since they do not involve investment banking fees and brokerage charges<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Companies usually define a use case when they want to raise money through ICOs. There is no such need when it comes to STOs.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">ICOs do not give investors the right to gain or distribute profits like traditional shareholders. Whereas, STOs give investors the option to take part in voting and revenue distribution.<\/span><\/li>\n<\/ul>\n<h2><b>How can I participate in an STO?<\/b><\/h2>\n<p><span style=\"font-weight: 400;\">It is quite easy to participate in an STO. Since there are many companies offering STOs:<\/span><\/p>\n<ul>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Decide which STO you wish to invest or participate in<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Find a regulated platform that offers the asset that you&#8217;re interested in.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Make an account on the given platform using true details as you may be asked to verify your identity during or after the process.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><a href=\"https:\/\/www.investopedia.com\/terms\/a\/aml.asp\"><span style=\"font-weight: 400;\">AML <\/span><\/a><span style=\"font-weight: 400;\">and <\/span><a href=\"https:\/\/complyadvantage.com\/knowledgebase\/kyc\/\"><span style=\"font-weight: 400;\">KYC <\/span><\/a><span style=\"font-weight: 400;\">checks will be required in most cases.<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">Once your account gets approved and verified, you will be able to go through the available options and make a purchase.\u00a0<\/span><\/li>\n<li style=\"font-weight: 400;\"><span style=\"font-weight: 400;\">You will need a compatible\u00a0<\/span><a href=\"https:\/\/paybis.com\/blog\/what-is-a-hardware-wallet\/\"><span style=\"font-weight: 400;\">wallet<\/span><\/a><span style=\"font-weight: 400;\"> in order to make purchases.<\/span><\/li>\n<\/ul>\n<p>While STOs offer regulatory compliance, investors should still learn <a href=\"https:\/\/paybis.com\/blog\/how-to-spot-avoid-crypto-scams\/\">how to\u00a0avoid crypto scams<\/a>\u00a0and verify the legitimacy of any token offering before investing.<\/p>\n<p><span style=\"font-weight: 400;\"><strong><em>Note:<\/em><\/strong> The exact method may differ based on the platform you have selected.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Short for Security Token Offering, STO refers to the process of issuing a token or crypto coin to an investor. These tokens fall under securities and are linked to an asset just like stocks and bonds.<\/p>\n","protected":false},"featured_media":0,"template":"","glossary_letter":[280],"glossary_term":[277,279],"class_list":["post-6682","glossary","type-glossary","status-publish","hentry"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.4 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What is an STO and how can investors participate? - Paybis Blog<\/title>\n<meta name=\"description\" content=\"In this article we explain what is an STO and its main difference with other token offering models. 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