Security Token Offerings
43 Pages Posted: 16 Jul 2020 Last revised: 22 Apr 2021
Date Written: April 22, 2021
This paper shows that distinguishing security token offerings (STOs) from initial coin offerings (ICOs) is crucial for the study of entrepreneurial finance. We first provide a working definition of a security token and present an overview of the STO market using a unique STO sample. The STO activity developed after the end of the ICO market bubble. The STO market is, however, still a nascent market. STOs are geographically dispersed but concentrated in jurisdictions with accommodating securities laws. Next, we explore STO success factors. We show that various issuer and offering characteristics, traditionally used in the ICO literature, also matter for STO success. We also find that success is associated with good governance practices, consistent with the corporate finance literature. We conclude by discussing the implications of native digital securities, the next generation of security tokens, for entrepreneurial finance.
Keywords: blockchain, corporate governance, entrepreneurial finance, initial coin offering, native digital securities, securities laws, security token offering, tokenization
JEL Classification: G11, G32, G34, L26, M13
Suggested Citation: Suggested Citation