Despite the plethora of ICOs we have seen in the past year, more and more issues have been recognised in ICOs, including unclarity about how investors should fairly evaluate token values when those values are not backed by specific cash flow. As a result, STOs (Security Token Offerings) have increasingly gained attention in the recent months. In STOs, companies fund-raise by issuing tokens offered as securities in accordance with applicable financial regulations, while investors are entitled to receive dividends from businesses funded by their investments. 3 Types of Security Tokens Generally speaking, there are 3 types of security tokens; Asset Finance Token, Project Finance Token and Equity Token. They differ in the types of cash flow to which their dividends correspond. Asset Finance Token is backed by beneficiary rights of assets, meaning that raised funds are used to purchase assets and investors are entitled to receive returns generated as a
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