Security Token Offerings (STO) are a type of public offering in which tokens of digital securities, known as security tokens, are sold in digital asset exchanges. Its advantages include the blockchain technology which allows users to initiate and settle their transactions 24/7. In STO, smart contracts can be used to install intelligent functions to reduce manual interventions. This reduces the possibility of errors and increases efficiency of transactions ultimately having a positive effect on transaction costs. STO is rapidly growing. However, there has been slow response from the market because of lack of awareness and clear regulations and legislations that concerns the investors to have their ownership stake preserved digitally on the blockchain ledger.
(Note: The above thought piece covers the wider VA industry, and may not be an activity that Arabian Bourse Limited (ABX) is looking to be licensed to undertake.
ABX has received in-principle approval from Financial Services Regulatory Authority of Abu Dhabi Global Market (ADGM) and is currently in the process of obtaining an FSP. ABX aims to be the first of its kind fully regulated, virtual asset MTF and custodian in the region focused on institutional and retail investors.)