A security token is a digital representation of a traditional security, such as stocks or bonds, that is issued and traded on a blockchain or distributed ledger technology (DLT) platform. Unlike cryptocurrencies, security tokens are designed to comply with securities regulations and derive their value from an underlying asset or investment.
A Security Token Offering (STO) is a fundraising method in which security tokens are issued and sold to investors. It is similar to an Initial Coin Offering (ICO), but with the key distinction that STOs comply with securities regulations. STOs provide companies and projects with a means to raise capital by offering tokenized securities to investors in a regulated manner.
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