STO (Security Token Offering)
A regulated fundraising method where blockchain tokens represent ownership in an underlying asset — such as equity, debt, real estate, or revenue shares — and comply with securities laws. STOs offer more investor protection than ICOs through regulatory compliance, including investor accreditation requirements, prospectus filings, and transfer restrictions.
“A real estate company might conduct an STO to sell fractional ownership of a commercial building, with each security token representing an equity share and entitling holders to rental income distributions.”
ICO (Initial Coin Offering)
A fundraising method where a cryptocurrency project sells newly created tokens to early investors before the token is publicly tradable. ICOs were extremely popular in 2017-2018 but attracted significant regulatory scrutiny due to widespread scams and securities law violations. Many jurisdictions now require ICOs to comply with securities regulations.
Security Token
A blockchain token that represents ownership in a regulated financial asset — such as equity in a company, a debt instrument, real estate, or a fund — and is subject to securities laws in the issuing jurisdiction. Security tokens must comply with regulations like SEC's Regulation D or Regulation S, including investor accreditation, transfer restrictions, and reporting requirements.
Compliance
The adherence to regulatory requirements governing cryptocurrency businesses, including Anti-Money Laundering (AML) rules, Know Your Customer (KYC) procedures, securities laws, tax reporting obligations, and sanctions screening. Regulatory frameworks vary significantly by jurisdiction and are rapidly evolving. DeFi's permissionless nature creates unique compliance challenges compared to traditional finance.
RWA (Real World Assets)
Physical or traditional financial assets — such as real estate, government bonds, commodities, private credit, and equities — that have been tokenized and brought on-chain as blockchain tokens. RWA tokenization aims to make traditionally illiquid or access-restricted assets tradeable, fractionally ownable, and composable with DeFi protocols. It is viewed as one of the largest growth opportunities for bridging traditional finance with blockchain.