Security Token

A Security Token is a digital representation of a traditional financial asset, like stocks, bonds, or real estate, that’s issued and traded on a blockchain under regulatory frameworks.

How Security Tokens Work

Unlike utility tokens, which provide access to products or services, security tokens are backed by real-world value and represent ownership, debt, or profit-sharing rights. They’re subject to securities laws and must comply with regulations, making them more secure but also more restricted. Security tokens are often issued through Security Token Offerings (STOs), which resemble IPOs but in a blockchain format.

Why Security Tokens Matter

Security tokens bring transparency, efficiency, and liquidity to traditional markets by allowing fractional ownership and automated compliance via smart contracts. They also lower barriers for investors and issuers alike. As regulation in the crypto space matures, security tokens are expected to play a major role in bridging legacy finance and blockchain technology.