What are Security Tokens

Security tokens are crypto tokens issued to investors in a token sale or ICO for the exchange of their money. Crypto tokens that pay dividends, share profits, pay interest or invest in other tokens or assets to generate profits for the token holders are deemed as ‘security tokens’.

Such tokens are prohibited in countries like the US and should be compliant with SEC prior to their ICO or token sale to be able to conduct in such affairs.

Problem face by businessman when using security token

Many of the organizations conducting an Initial Coin Offering (ICO) have been desperately trying to avoid having their tokens classified as securities. Mainly because a classification as a security automatically comes with many regulations and limitation on who can invest in these tokens and how they can be exchanged.

Secondary trading and liquidity is greatly reduced for these kinds of tokens, as securities cannot be traded freely and are subject to many restrictions. This can limit or even destroy the network effects and the use of the tokens to build a widely adopted platform or protocol.

Difference between security token and utility token

With security tokens there is a reasonable expectation of profits, consisting of dividends, periodic payments and/or the increased value of the investment. Profits are to be derived from the entrepreneurial or managerial efforts of others (i.e. of the founders). Voting rights of the token holders do not provide meaningful control over the startup.

A token is either a utility token or a security token, it can’t be both. Furthermore, Security tokens often require licensing, which can be too costly and administratively demanding for many startups. For this reason most ICOs shoot for utility tokens. Even if new coins qualify for the less regulated utility token, most ICOs are more than happy to use Know Your Customer (KYC) and Anti-Money Laundering (AML).

About MOBU

MOBU offers a decentralized organised ICO platform to facilitate the release of compliant security tokens on the blockchain. Real businesses wishing to raise capital by issuing security tokens will build their ICOs on the MOBU platform. MOBU creates an abstract smart contract from which all security token ICOs will be extended. The MOBU abstract smart contract will contain the code that is required by the security token ICOs to conform to the MOBU ERC20 platform and the MOB20 standard to adapt to the ideas and requirements of MOBU. A regulatory friendly token is the only way to allow institutional money to enter the blockchain and a user-friendly platform for trusted ICO`s is the only way to allow nontech businessmen to participate in the blockchain.

how MOBU will facilitate the release of security tokens on the blockchain and what solutions does it offer to protect the investors.

MOBU is instrumental to this new rush of riches creation. MOBU encourages the
arrival of consistent security tokens easily and certainty for all organizations
that are upheld by genuine resources wishing to raise capital on the blockchain.

MOBU offer the accompanying Solutions

• Bridges the hole between the securities commercial center and the blockchain.

• Provides illumination and conviction to both the financial specialist and the backer as far as desires and right

• Prevents prominent hacks by segregating the capacity of every security advertising.

• Provides legitimate

This is my entry for the sponsored writing contest organized by @monajam. You can find the contest here