This article was first published on: Latest Crypto News --
There’s been a lot of confusion in the cryptosphere regarding which tokens qualify as securities under the widely convoluted U.S. Securities and Exchange Commission (SEC) guidelines. And now, the agency has gone out of its way to further demystify this class of assets.
So What is a Security Token?
Security tokens have some striking properties and one of those is that they have tradable value, meaning they can be exchanged or sold. In many cases, they are purveyed by a company seeking initial capital to further the development of a concept. Investors are usually promised direct financial returns through the appreciation of asset-value and this makes them somewhat similar to company shares.
The only difference is that security tokens derive their value from an external tradable asset. It could be part of a company or real estate, for example, but the ‘shares’ are blockchain based.
Security Tokens vs Utility Tokens
Security tokens contrast greatly with utility tokens. Investors of the ...
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