The new financial instruments, such as Security Token Offerings (STO) and Safe Agreement for Future Tokens (SAFT), reducing risks of investment into a blockchain project, become a response of the cryptosociety to the restrictions of the requirements to ICO projects by regulators.
The new instruments of the industry, providing execution of the requirements, are tokens of this type.
STO is a sale of tokens which perform the function of securities. STO owners not only get profit, but also participate in decision-making, and manage a startup as shareholders. It is planned that as soon as the company sells all STO, it will enter the stock markets and those tokens will be exchanged for securities.
Financial regulators, such as the United States Securities and Exchange Commission (SEC), approve a primary distribution of coins. As for the start of STO, it is necessary to undergo the official registration, to obtain the license for financing, and to provide the observance of procedure of investors identification of KYC/AML. If a company ignores the requirements or fails to meet them, it will fall under the operation of the law on sales of the unregistered securities, and it will have to pay a penalty and to return the means back to investors.
SAFT represents the attraction of financial resources without a token sale. In the beginning, a company raises funds for a start of the project, and only after that passes to development of the token. When carrying out SAFT, investors are offered contracts for a number of coins. Those contracts could belong either to utility type, or the type of security-tokens. The second type of tokens is respectively more reliable against swindlers. Also, as well as in the first case the STO demands to stick to the standards of KYC/AM, and it assumes interaction with financial regulators. This method of financing was used by ICO Telegram and had collected 1.7 billion dollars to the implementation of the project.