STO's (Security Token Offerings) are tokenized real-world assets such as real-estate, bonds and equity, etc. STO's are a new form of assets. To launch an STO, you need to comply with regulations. Certain laws apply to how they should be offered and how they can and can't be handled. Things like KYC (Know Your Customer), AML (Anti Money Laundering), number of shareholders etc. To make things more complex, these laws could change in the future. All these factors can be enforced and recorded through special designed smart contracts. Tezos has institutional grade smart contracts and is working on a new standard, the NYX Standard. More about STO’s and why ERC20 falls short, in this article.

Since these STO tokens can’t be issued and traded freely, it will be impossible for just any exchange to simply buy a bunch and have people buy and sell them on their exchange as is done now with cryptocurrencies. The tokens will always need to be stored on the blockchain they are launched on. All transactions will need to be registered on the blockchain. Specialized platforms will be integrating the blockchains that register these tokens. Securitize is such a compliance platform and protocol for creating and managing digital securities. It just released a video of the process how to issue and manage tokens on Tezos. Link to the video on twitter here.  

Tezos is expected to be one of the leading blockchains that issuers will launch STO's on. STO's announced on Tezos so far:

• BTG Pactual and Dalma Capital adopt Tezos for STOs worth $1 billion
• Bonda Vinci Signs Business Agreement with Tezos Korea for Joint Venture of Art and Real Estate Securities Token (STO)  
• Elevated Returns sets to Tokenize Thai Real Estate with a Target of US$100m This Year
• The Fundament Group has developed Germans first real estate crypto token and has just formed a strategic partnership with Tezos.
• The Security Token platform tZERO will Tokenize about $640 million in UK Real Estate. 
• TokenSoft is "projecting that within the next year, 25–35% of the amount processed through our platform will be on the Tezos blockchain. Currently our clients have processed half a billion through our platform, and they are currently seeking to issue $3 Billion+ onto the blockchain." Which comes down to about $1 Billion. 
• Andra Capital just announced to launch their new STO (SVC) on Tezos
• Transfer agent Vertalo wants its customers to issue securities on the Tezos blockchain.

More information about Tezos here: An introduction to Tezos

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