Security Token
A digital representation of a traditional security (equity, debt, or fund share) issued on a blockchain with built-in compliance rules enforced by smart contracts.
Full Definition
Security tokens are blockchain-based digital assets that represent ownership in real-world securities such as company shares, bonds, real estate, or fund interests. Unlike utility tokens, security tokens are subject to securities regulations and must comply with laws like Reg D, Reg S, or Reg A+ in the US. They combine the benefits of traditional securities (legal rights, dividends, voting) with blockchain advantages (24/7 trading, fractional ownership, automated compliance).
Why It Matters
Security tokens represent the evolution of capital markets infrastructure. By encoding compliance rules directly into smart contracts, they eliminate the need for intermediaries while maintaining regulatory compliance. Investors benefit from increased liquidity through fractional ownership, while issuers gain access to global capital markets with reduced costs.
On Sails.to, security tokens are issued as CrossSecurities — backed by a real legal entity (typically a Wyoming DAO LLC or Series LLC), ensuring clear ownership rights and regulatory standing. CrossSecurities can be held on-chain or CrossConverted to bankable ISIN form.
Related Terms
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