What Is a Blockchain Security Token?
Blockchain security tokens are digital equivalents of securities (shares), certifying property and giving owners the right to realize their investment interests (the right to shares, dividends, a share of profits, etc.). On the Ethereum blockchain, ERC-1400 is a nominated Ethereum security token standard for the issuance and management of security tokens. These rights are recorded in a smart contract, and the tokens themselves are traded on exchanges. The turnover of security tokens takes place in accordance with the legal regulations of financial regulators in various countries, for example, the US Securities and Exchange Commission (SEC) or the Swiss Financial Market Supervision Authority (FINMA). Check out this article on everything blockchain security tokens from ChangeNOW, a leading instant cryptocurrency exchange service.
Unlike utility tokens, best security tokens are tied to real securities that represent tokenized assets. In some cases, these tokens represent real capital in the enterprise, that is, they play the role of a “digital share”. A security token is not necessarily tied to a share in the company, they can be used to divide the owner’s rights to a wide range of assets, from real estate to art. In fact, they may grant the holder a number of rights. This may be shareholding, periodic dividends, finance inflows, debt payments, voting rights, etc. Essentially, the income that security token holder gets makes security coins crypto equivalent of real share.
What is important is the fact that, due to the nature of these tokens, from a legal and regulatory perspective, they are treated quite differently. Their value is backed by securities, therefore security tokens are considered an investment. In addition, this means that additional regulatory requirements and reporting requirements are imposed on the companies issuing them. This is a particularly important difference for investment organizations, as it prevents one of the biggest problems of utility tokens. Investors do not receive any compensation from ICO, in case the project fails or the team simply takes their money and escapes but in the case of STO they do.
How To Buy Security Tokens?
Similar to utility tokens, the easiest way to get your hands on a security token is to buy it from Secure Token Offering (STO). STOs treat the issuance of digital assets in full compliance with the requirements of the legislation on securities. This should provide a higher degree of protection of investors’ rights and reduce regulatory risks for issuers of tokens. In addition, STOs are guided by a different target audience. Only professional (accredited) investors can participate in such a placement.
Despite the fact that this direction is considered promising, the possibilities of investors are still quite limited. However, for security tokens, 2018 was quite a year and now we see a lot of new partnership contracts being signed up. large cryptocurrency platforms, like Binance, are announcing their intentions to work with top security tokens crypto world has to offer.
Best Security Tokens
In this part, we would like to mention some top security tokens crypto world has to offer. It is not a list of security tokens crypto enthusiast have come up with but rather a list of security coins that are largest and most well-known.
First of all, we should mention BCap. It was one of the first security tokens that came to the market and paved the way for the rest.
Another important security token is SPiCE VC. It is the first ventured capital funds platform that allows token holders to reduce the time needed for the establishment of the liquidity of their investments.
Siafunds security tokens became available a year ago and gained significant popularity ever since. That security token should not be confused with the utility token that Sia issues as an inner currency for their platform.
Security Tokens vs. Privacy Coins
It is important to not mix up the notions of security tokens (security coins, crypto enthusiasts may say) and privacy coins. The latter is a special kind of coin that hides your public address and transaction history. the balance of any wallet is hidden as well. itis the most secure cryptocurrency if you are not keen on the idea of making each and every one of your transactions public. You can look at the crypto privacy coins list that we have made earlier and investigate other resources to find a full list of all privacy coins. List of privacy coins can help you make a choice on your preferred currency for digital payments if you do need or prefer to make them anonymous.