Uzbekistan Creates Legal Framework for Security Token Offerings (STOs)
Uzbekistan is looking to attract security token-oriented companies by creating a legal framework for this emerging industry.
Uzbekistan, a Central Asian country, is ready to adopt the security token market. Bobir Akilkhanov, investment director at state-backed Digital Trust, revealed in a recent interview with Forbes that the country was working on a legal framework aimed at security token offerings (STOs) – a form of fundraising that finds a place between initial coin offerings (ICOs) and initial public offerings (IPOs).
Last year, we reported that Uzbekistan was working on cryptocurrency-oriented regulations to encourage related businesses and startups. In September, the new president Shavkat Mirziyoyev officially recognized cryptocurrencies as legal tender and created the already mentioned Digital Trust – an investment fund that focuses on blockchain and crypto projects.
Now Uzbekistan seems to move forward, like Lithuania, and embrace security tokens. Akilkhanov told the press:
“We are looking very carefully at STO and just starting to build the framework for it.”
He continued with comparing STOs with ICOs, with the latter being flooded by scams.
“We understand that ICOs were a hype tool for investors, with no assets to back up those coins. STOs are more of a legitimate investment because you can tokenize your assets. We are working on the laws to build the market. We don’t want to hurry through it and make all these mistakes and have something that is not useful,” the Digital Trust executive noted.
Security tokens are blockchain-based tokens that are backed by real-world assets like company shares, real estate or commodities among others. Those who bet on ICOs are investing in an abstract idea and a potential future reward. However, many ICOs failed because the teams behind them could not handle their projects.
Neighboring country Kazakhstan has also demonstrated its openness to the distributed ledger technology (DLT), though it has been more cautious in regard to cryptocurrencies.