Overview
A security token is a token that represents an investment contract or ownership stake, subject to securities regulation. It tokenizes traditional securities like equity or debt. Security tokens offer programmability and fractional ownership.
How It Works
The token is issued under a legal framework and represents a claim on an underlying asset or revenue. Transfers may be restricted to comply with regulation. It brings traditional securities onto blockchain rails.
Why It Matters
Security tokens bridge traditional finance and crypto, enabling efficient settlement and fractional ownership. They operate under securities law, affecting who can hold and trade them. They are a key part of asset tokenization.
Related Concepts
Security Tokens relate to Tokenization, Securities Law, and Regulation. They tokenize Equity and Debt assets.