GlossaryAdvanced
Security Token
A crypto token that represents an investment contract or ownership interest subject to securities regulation.
A security token is a crypto token structured (or determined by regulators) to represent an investment contract or ownership interest, making it subject to securities regulation in relevant jurisdictions, unlike a token designed purely for utility within an application.
Whether a specific token is legally classified as a security depends on jurisdiction-specific legal tests applied to its actual structure and marketing, not simply what the project calls it.
Examples
- A token sold with promises of profit derived from a third party's efforts may be evaluated as a security token.
- Security token classification depends on jurisdiction-specific legal analysis, not a token's self-description.