Security Token
A token that legally represents a regulated financial security — bringing traditional assets on-chain under securities law.
A security token is a token that represents ownership in a regulated financial instrument — equity, debt, a fund, real estate — and is legally treated as a security, subject to securities laws. Unlike a utility token (meant to be used within a product), a security token explicitly is an investment vehicle, with the compliance that entails.
Security tokens sit at the intersection of crypto and traditional finance, closely related to tokenized stocks and real-world assets — a category accelerating in 2026 as regulators (the SEC issued a tokenized-securities taxonomy in January) clarify the rules. They promise 24/7 trading, fractional ownership, and programmable compliance for regulated assets, but require KYC-gated transfers and issuer accountability. They represent regulation-embracing tokenization rather than regulation-avoiding.