RWA Jargons – STO vs. RWA
Security Token Offerings (STOs) and Real-World Assets (RWAs) involve asset tokenization on blockchains but differ in nature and regulation.
- STO: Represents securities (e.g., stocks, bonds), subject to strict securities laws and KYC/AML requirements, used for company or project financing. STO tokens, akin to traditional stock certificates, are recorded on the blockchain, offering transparency and security.
- RWA: Includes non-security assets (e.g., gold, art, real estate), with regulations varying by asset type, aimed at improving liquidity and fractional ownership. RWA tokenization makes high-value assets more accessible, such as buying art shares via blockchain.
STOs offer regulated investment avenues, suitable for institutional investors; RWAs democratize asset access, appealing to retail investors. STOs face complex compliance requirements, while RWAs involve challenges in asset valuation and custody. According to BCG, the RWA tokenization market is projected to reach $16 trillion by 2030. Both drive the convergence of traditional finance and blockchain, potentially reshaping financial markets.
Disclaimer: The content contained herein is for informational and educational purposes only. Virtual asset prices are subject to high market risk and price volatility. The value of your investment may go down or up, and you may not get back the amount invested. You are solely responsible for your investment decisions, and we are not liable for any losses you may incur. You should only invest in products you are familiar with and where you understand the risks. You should carefully consider your investment experience, financial situation, investment objectives and risk tolerance and consult an independent financial adviser prior to making any investment. Past performance is not a reliable indicator of his/her future performance. Content on our platform does not contain advice or recommendations. This material should not be construed as financial/investment advice.
