Security tokens are digital assets that represent ownership of a real-world security, such as stocks, bonds, or funds, and are created through blockchain technology. These tokens provide investors with legal rights, such as dividends, profit shares, or voting rights, similar to traditional securities.
Security tokens offer increased transparency and liquidity compared to traditional securities, as they are traded on blockchain-based platforms and can be easily bought, sold, and transferred globally. Additionally, security tokens are subject to strict regulations, such as Know Your Customer (KYC) and Anti Money Laundering (AML) requirements, ensuring investor protection.
By tokenizing real-world assets, security tokens enable fractional ownership, allowing investors to purchase small portions of high-value assets traditionally out of reach. This democratizes investing, making it more accessible to a broader range of investors.
Overall, security tokens combine the benefits of blockchain technology, such as instant settlement and low transaction costs, with the legal protections of traditional securities, creating a new asset class that is revolutionizing the way investments are made and managed.
