Security Token Offerings: Equity Or Debt? How Financial Statements Are Affected

1. INTRODUCTION

Security Token Offerings (STO) is the new method of fundraising. STO follow a similar structure to ICO. They involve the sale of crypto tokens which are built on a blockchain and are backed by something of value (i.e. shares, dividends, bonds, other assets or profits from the company), which can be traded, sold, or held by the investors.

Security tokens are digital assets and they are considered to be the securities of the future, providing an attractive alternative to companies seeking fundraising.

This publication aims not only to give suggestions regarding the possible accounting treatment of STO, but also to determine the Tax and VAT treatment of STO from the issuer company's perspective, using supportive illustrations.