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STO Development
The cryptocurrency industry has seen a recent surge in the development of Security Tokens, which comply with the Howey Test and derive their value from a tradeable external asset. These tokens are fully compliant with federal security laws and help improve investors’ confidence in various projects.
Security Tokens are a type of Crypto Token that meets the criteria of the Howey Test, and often derive their value from an external asset that can be traded. They are subject to federal securities regulations and are considered Securitized Tokens. To enhance investor trust and attract funding for different projects, Security Token Offerings have been created.
As market leaders in Blockchain Technology, our highly skilled team has vast experience in developing both utility and security tokens, which have helped many organizations achieve their objectives. At Blockchain App Factory, we have created an advanced Security Token Issuance Platform based on distributed ledger technology, which is at the forefront of the industry.
Security Token Offering Services
The Security Token Offering (STO) aims to attract institutional investors to participate in the cryptocurrency and blockchain ecosystem. By leveraging the trustless nature of blockchain technology, STOs can automate legal and auditing requirements using smart contracts.
Security Tokens are financial securities that comply with SEC regulations, providing investors with a range of financial rights defined in smart contracts. These tokens are traded on the blockchain network, providing transparency, security, and efficiency.
At Digital Sea India Pvt Ltd, we are pioneers in developing Security Token Platforms. Our platform enables the creation of tokens on your own blockchain network, which offers zero gas prices, faster transaction times, and eliminates network congestion, among other benefits.
Additionally, we have access to a network of investors who are interested in funding projects through Security Token Offerings (STOs).
White Label ICO Development
Step 1
Digital Sea India Pvt Ltd conducts due diligence for tokenization, assisting issuance companies in identifying suitable securities such as commercial estate.
Step 2
Our security token advisory team, comprising auditing, financial, and legal consultants, advises on jurisdiction checks and securities titles, including credit ratings and other owner-specified parameters.
Step 3
An SPV/SPE is formed exclusively for the purpose of trading security tokens when tokenizing securities.
Step 4
Digital Sea’s strength lies in the technology behind Tokenized Securities and they believe that ERC-20 is not suitable for STO due to gas prices, network congestion, and protocol changes; thus, they will develop customized blockchains with built-in smart contracts either on Ethereum, Hyperledger or Stellar.
Step 5
An auditing firm scrutinizes the valuation of the securities, suggests a value per token, and then your issuance company can issue a token at that price.
Step 6
A dashboard with investor management for issuers and fund management for investors, including KYC/AML, Accredited Investor verification, and voting rights, is provided once the token is developed with regulations embedded into the smart contract.
Step 7
The legally compliant tokens are offered through a Security Token Offering (STO), and the smart contract automates regulatory requirements, eliminating the need for third-party intermediaries like transfer agents.
Step 8
Upon completion of the STO, the tokens can be listed on Security Token Exchanges for secondary market trading or traded through Over The Counter (OTC) where accredited investors can directly trade with token holders.
Security Token Technology
The Ethereum Blockchain with ERC-20 tokens may not be sufficient to meet the requirements of securities-backed tokens due to issues such as high gas prices, network congestion, and protocol limitations. To address these challenges, Blockchain App Factory develops customized, scalable blockchains and smart contracts tailored to the specific needs of the project, whether on Ethereum, Hyperledger, or Stellar.
Legally Compliant Tokens
Our tokens have smart contracts embedded with the regulations of the registered jurisdiction encoded, encompassing legal frameworks for fundraising, investor qualification rules, and transaction limits on transfers. This ensures legal compliance and provides transparency and security for investors and token holders.
Global Investor Participation
Companies that issue tokens often encounter difficulties when engaging in cross-border trading due to differing regulations. To address this, our tokens are designed to enable cross-border trading while ensuring compliance with relevant securities laws. We implement conditionalities on the smart contract to ensure that token sales and secondary trading are conducted in a transparent and secure manner that complies with applicable laws and regulations.
Transparency
Blockchain technology provides financial regulators with complete visibility into all transactions, including conditional transactions. The transparency offered by a blockchain ecosystem can facilitate the integration of cryptocurrency markets under government regulation. With transfer agents being automated, entrepreneurs can raise funds in a more efficient and cost-effective manner, streamlining the fundraising process.
Wallet
Digital Sea India Pvt Ltd has developed a technology that enables issuance companies to reissue tokens to investors in the event that the investor loses their wallet keys, subject to specific terms and conditions. To facilitate this, the wallet must be compatible with legal requirements and investors must have the right to reclaim their lost tokens.
Types of STO(Security Token Offering) Development
Equity Token
Through an STO, our tokens are backed by company stock, granting token holders equal voting and dividend rights as actual stockholders
Reserve Assets Token
Our platform enables companies that deal in real-world commodities such as gold and real estate to launch an STO backed by their reserve of these assets.
Debt Token
Instead of tokenizing stock or reserving assets, companies can opt to raise funds by issuing Security Tokens with a promise of payback to attract debt investors.
Voting Rights
A proprietary voting platform built on blockchain enhances security, transparency and scalability which is stored on a distributed ledger. An ecosystem of governance is created for your companies security token structure to meet your needs. This reduces the overhead in the voting process and makes the governance of your organization easier and increase trust among your investors. The voting rights platform ensures a peer to peer, trustless secret ballot immune to intermediary attack and exposes vote manipulation if any. Through a off-chain layer, we ensure the scalability of the platform which can handle millions of votes per minute. Transparency is inherent to blockchain and the stakeholder can verify every vote in the system through fully auditable codes. There is no single point of weakness in the system with minimal risk of being compromised due to the decentralized nature of the system.
KYC/AML Automation
In the context of regulated STO, the primary obligations include KYC/AML verification to mitigate risk via reputation scoring, enabling issuance firms to recognize high-risk parties, and to authenticate and prevent identity fraud of their investors, ultimately proving their identity. Moreover, such automation streamlines the investor onboarding process, facilitates compliance with the latest regulatory requirements, and allows for timely responses to any emerging developments through an adaptable interface
Accredited Investor Verification
With our user-friendly interface, companies can confidentially verify their investors by sending them a simple questionnaire, certification requirements, and supporting documents via email upon signing up for our STO, while we legally verify accredited investors through licensed attorneys who maintain confidentiality and ethical codes during background verification.
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Other Development Services Offered
Our company also offers ICO Development, IDO Development, and IEO Development services to help our clients raise funds through different means of token sales.
