As the expression goes: “Look before you leap.”
But if you are an innovator, determined to blaze a trail never before navigated – there is not much to look at.
Being a pioneer can be a lonely and dangerous adventure.
Nothing could be more true when it comes to navigating the maze of Securities and Exchange Commission (SEC) rules and regulations if you are a US issuer in a fundraising mode – determined to eschew garden variety paper certificates and book-entry securities by issuing security tokens (a/k/a digital securities) in a so-called “security token offering” or STO.
If you are satisfied with raising money from (only) accredited investors, there is a clear regulatory path for the initial issuance of security tokens, as far as federal securities laws are concerned.
But if an issuer wishes to expand its investor base to non-accredited investors and raise more than $1 million, as a practical matter the only path open to an issuer is either a fully registered, SEC reviewed offering, with burdensome ongoing reporting obligations, or Regulation A+, a kinder, gentler alternative to a registered offering.