Security Tokens

Security tokens are representative of legal ownership of a physical or digital asset which is verifiable on the blockchain. In order for a token to be considered a security token, it must pass the Howey Test, in that they must have an expectation of a profit. Security tokens also often have an expectation of profits based on the work of others. Security tokens are heavily regulated, unlike utility tokens. In order to fractionalise Real Property, it is necessary to utilise security tokens.

Stocks, bonds and commodities whose ownership is attached to a crypto-token, hosted on a blockchain are forms of financial securities, referred to as Security Tokens. 

In considering asset types, security tokens generally represent a more traditional type of asset than value-based utility tokens, or cryptocurrencies – and due to this are also known as digital assets, rather than classed as cryptocurrencies.

Security tokens have now been given the green light to join the market in a legal and compliant manner, thanks to better regulatory conditions around the world.