German Multi-Millionaire, Marvin Steinberg, Believes Security Tokens are Blockchain’s most Desirable Use-Case
Initial Public Offerings (IPOs) are the primary marketing issuance of shares from a company to the public. Almost all successful companies undergo this process as it is extremely effective for raising funds for the launch of new products or services as-well-as fueling the growth of startups.
The value of the stocks is determined by an investment bank that evaluates the shares and sets the price. The key point here is that the price has to be low enough to attract as many investors as possible but also high enough to raise enough funds, and this is why most companies who IPO use an investment bank to act as the underwriter.
A Security Token Offering (STO) is similar to an IPO but instead of stocks, this method offers investors security tokens or cryptocurrencies. Both methods are quite similar but have some fundamental differences. Similar to the shares issued in an IPO, security tokens do grant investors equity in the company as well as dividends.
But what exactly is a Security Token Offering (STO)?
In a nutshell, an STO is a blockchain-based financial instrument that allows you to “tokenize” various assets with the aim of raising money from investors all around the world.
These assets can be pretty much anything: real estate, private funds, stocks, debentures, derivatives, or any other tangible and intangible asset.
The important thing is that people can own a digitized part of these assets, thereby providing your company with outside investment – kind of like a “democratized”, more accessible IPO.
However, unlike the previously popular ICOs (Initial Coin Offerings), STOs are inherently much safer, ensuring the full protection of investors, while still offering unprecedented flexibility and convenience to the issuing company.
(NOTE: Sometimes STOs are also called Digital Security Offering (DSO), Smart Security Offering (SSO), Tokenized Asset (TAO), Asset-Backed Token (AT))
The most important thing to remember is that STOs can have a wide variety of variations since any asset can be tokenized into a security token, and this provides huge flexibility.
Additionally, leading researchers in the blockchain space, including Mesari and DAO Maker have shown that conducting STOs is far cheaper (up to 40%) than conducting IPOs. The decentralized nature of cryptocurrencies along with automatized processes using smart contracts makes STOs cheaper.
Security Token Offerings are also more transparent and provide a lower barrier of entry for investors. According to Marvin Steinberg, a serial entrepreneur and STO expert, this method is able to raise more funds in record time compared to traditional fundraising methods.
Plus, since STOs are basically applicable worldwide, pretty much anyone can participate from anywhere in an STO, as long as they have internet access. On the other hand, IPOs can be far more restrictive to foreign investors, and require you to conduct the entire process on one of the big stock exchanges in the world.
The Main Benefits of Security Token Offerings
Marvin Steinberg, with his company Steinberg Invest, is the co-founder of CPI Technologies and one of the leading Security Token Offering (STO) experts and top-recognized crypto entrepreneurs in the industry.
He’s helped hundreds of companies collectively raise over $250M so far. Marvin Steinberg also has direct contact with family offices worldwide and his influential network includes almost all licensed companies that sell tokens internationally.
In a recent interview with Bitcoin Magazine, Marvin Steinberg explained how he also helped drive mainstream adoption for tokenized bonds and tokenized buildings like hotels with regulators across Europe, and how he’s the leading the largest STO project in the world, the Times Square project.
Marvin asserts that STOs are the future and will disrupt the IPO industry soon. IPOs are still dominated by traditional investment banks and these IPOs demand massive bureaucratic hurdles in almost all cases. Marvin Steinberg explains that this is not the case with a STO. Marvin describes that security tokens allow both startups and enterprises to tokenize assets, including equity, and issue them on a blockchain while retaining the legal safety that would otherwise attract institutional investors to only IPOs.
Marvin Steinberg, a successful serial entrepreneur, asserts that businesses that seek capital raise can dodge the jargon involved with an IPO and simply pursue the future of fundraising: STOs. Marvin believes that much of the media does not yet reflect on STO news, but that is only due to the novelty of this technology.
Marvin Steinberg explains that STOs are simply better in all aspects and able to attract far more investors and funding as they are also a novelty. In addition, they also have some major benefits, including:
- The ability to raise more funds in record time without the hassle & uncertainty of traditional fundraising
- A cost-effective way to get instant access to a worldwide pool of investors and virtually unlimited funding opportunities (hundreds of times larger than the ICO market)
- Unprecedented freedom because – in contrast to stocks – STOs are globally liquid and not anchored to any trading platform
- Peace of mind and lower risk because of cutting-edge blockchain technology and comprehensive regulatory controls that make scam almost impossible
- The flexibility to raise funds not only for blockchain-based projects, but also for traditional enterprises, IT companies, and even general startups
- Measurable and regulated investment risk, with guaranteed respect for the rights of investors. In contrast to utility tokens, a security token (Type #2) is a full-fledged instrument investment, since it’s secured by a particular asset
- Instant online access to investment markets, and the ability to become “globally liquid”, thereby not being anchored to any trading platform (unlike traditional stocks and stock markets)
- Better protection for both the issuing company and the investor because of verified investor eligibility and automatically secured investor rights
And also, very importantly, security tokens enable the possibility of ‘fractional ownership.’ This means that any asset that is tokenized can be fractionalized into smaller units; for example, investors buying a piece of gold could fractionalize the ownership into smaller parts than what would be physically possible. Marvin Steinberg explains how this makes the investment far more attractive and affordable.
Another major benefit of security tokens is the fact that the market is always open, 24 hours a day, 7 days a week, and 365 days a year. Marvin Steinberg explains that the majority of administrative responsibilities are done automatically and the issuance, registry, etc. do not need human intervention.
The Complexity of STOs
Security Token Offerings are a great way to raise funds. However, because they are regulated, anyone who wants to start one will need a professional STO advisor. Marvin Steinberg explains that startups should seek help from a certified STO advisor to avoid costly and dangerous legal mistakes. Unfortunately, there’s a lot of misinformation out there.
According to Marvin Steinberg, a leading STO expert and Founder of CPI Technologies:
“Today, scores of providers are trying to sell sub-par solutions based on false assumptions that over-promise… but under-deliver. And since the demand for STOs is rising at an incredible rate, a lot of companies fall into this trap, just because they’re afraid to miss out on the action.”
Not only that but creating a Security Token Offering carries with it a lot of risks as well, from technical, promotional, and of course, legal aspects. What this means is that not only do you have to build a rock-solid platform that works extremely reliably – you also have to successfully market and promote your STO, while also complying with hundreds of strict regulations at the same time.
For example, you have to be able to:
- Choose the perfect STO Type and Structure for your project
- Know which Jurisdiction to use (and which ones to avoid)
- Take care of the most important legal aspects to avoid potential fines
- Architect a 3-part crowdfunding campaign to quickly get investors for your STO
…and do all of this at each stage of the STO creation process.
Yes, STOs are fully regulated, thereby protecting investors from scams – however, this also makes the legal framework time-consuming. For this reason, Marvin Steinberg has tailored the white-label software of CPI Technologies towards STOs so that it can be possible to offer a full package of solutions to both enterprises and startups, that are looking to launch their own STO.
Over the last 2 years, CPI Technologies has helped more than 40 projects succeed and guarantees clients a positive ROI within 3 months. Marvin Steinberg has created a compact guide on how to launch an STO where Marvin asserts that taking care of the regulations and the jurisdiction is a crucial first step.
In fact, the company has an upcoming flagship venture, which is a $700M tokenization of a part of Times Square itself. Marvin explains that the tokenization of real estate makes it accessible to anyone, making way for opportunities that never existed before.
Marvin Steinberg also comments on the technical aspects of STOs and the idea to separate them into 3 different rounds, taking advantage of European laws. This includes a PRIVATE sale, a PRE-sale, and a MAIN-sale.
In addition, Marvin states that startups looking to launch a successful STO need to make sure the infrastructure is robust to ensure a smooth and safe token sale.
Blockchain-based projects are becoming extremely popular and the demand for funds is increasing significantly, this leads to a demand for STO expert advisors. Marvin Steinberg states that most startups and even established companies will eventually adopt STOs as the main fundraising method.
Marvin managed to acquire this huge partnership thanks to its proven record of helping big projects succeed and the amazing milestones CPI Technologies has set over the years, such as:
- 124% average yearly sales increase with your custom marketing campaigns
- 23+ Successful completed high-value projects
- 32.000+ bitcoins processed through our software since 2017
- 420% average visitor increase for our clients
- $100k+/month average profit for each of our exchanges
Marvin Steinberg has created a short quiz for startups that want to know if launching an STO is a good idea. This 2-minute STO quiz helps businesses get a quick introduction to the world of security tokens.