Security token offerings (STO) are becoming more popular, relative to initial coin offerings (ICO), according to a new report by Big Four firm PwC's global consulting subsidiary Strategy&. Released on March 8, the firm’s forth ICO and STO report was developed in collaboration with the Swiss Crypto Valley Association.

According to the joint report, STOs “are not fundamentally different from ICOs.” The document states that STOs are “a more mature and regulated form” of fundraising, noting — given the definition of a security — that the tokens sold in an STO can provide investors with various financial rights.

STOs, the report claims, also combine a number of ICO features, such as low entry barriers for investors, as well as traditional venture capital and private equity fundraising characteristics, such as Know Your Customer (KYC) and Anti-money laundering (AML) regulations.

With that, the overall number of both STOs and ICOs has declined significantly in the second half of 2018, which was allegedly caused by the ongoing crypto winter, as well as by the shift from the ICO to the STO model, the report says.

Out of total of about $19.7 billion raised by 1,132 ICOs and STOs in 2018, two projects accounted for over $5.8 billion of the volume, the report notes. Those companies are the Eos Foundation, which carried out the largest ICO in history, reportedly raking in over $4 billion in June 2018. The second ICO giant is Telegram messenger, which raised an also impressive $1.7 billion in two private ICO rounds for its TON crypto platform.

ICO/STO development from 2013 to 2018. Source: Crypto Valley

ICO/STO development from 2013 to 2018. Source: Crypto Valley

The report from Strategy& and Crypto Valley also noted the trend of the tokenization of commodities such as gold and oil, as well as the tokenization of intellectual property.

The United States Securities and Exchange Commission has long reminded investors that many tokens sold in ICOs are in fact securities under U.S. law, and thus should be registered with the agency.

Recently, Cointelegraph has reported that while ICO market is smaller that it was in 2018, it is still larger that it was at the beginning of 2017.

Earlier in February, ICO rating service ICObench reported that ICOs in Q4 2018 raised 25 percent less than in Q3, while the total number of ICOs increased.