What are tokenized securities?
Security Tokens are digital assets subject to federal security regulations. In layman terms, they are the intersection of digital assets (tokens) with traditional financial products.
If cryptocurrencies like Bitcoin are considered “programmable money” then you can consider Security Tokens a version of “programmable ownership.” This means that any asset with ownership can and will be tokenized (public & private equities, debt, real estate, etc).
Some of the potential benefits include:
- Illiquid assets — like VC interest, hedge fund interest, real estate etc can become liquid
- Lower issuance cost, i.e. fundraise at much lower cost
- Global markets could become accessible with less friction and thus lead to a larger investor base
- Trade fractions of an asset
- Overall lower cost, ease of transfer and settlement
- Potentially enables an open financial system as security tokens become compatible with smart contracts
- Instant convertibility between crypto assets and currencies