Security Token

A security token is a crypto token that represents a regulated investment, such as equity, debt, a fund interest or a share of profits, and is issued and traded under securities law. Unlike a general-purpose token it usually carries enforceable rights against an issuer and comes with disclosure, licensing and transfer restrictions; smart contracts often encode whitelists so only verified, eligible investors can hold it. Whether a token counts as a security depends on the jurisdiction and on economic substance rather than branding, which is why tokens marketed as utility can still be classified as securities later. Reclassification is a real risk for holders, because exchanges may delist a token or restrict it to certain markets once a regulator takes a position.