Library · Crypto, word by word · Law, tax and regulation
What is a security token?
A security token — the SEC calls it a digital security, commonly a tokenized security — is a stock, bond or other security issued as a crypto asset, with the ownership record kept wholly or partly on a blockchain. In the US, it remains a security, and the securities laws apply to it.
What it means for you
In the US, the SEC says a tokenized share or bond can carry rights that differ materially from the underlying security, including economic and voting rights, and whether the issuer or an unaffiliated third party tokenized it changes what you actually hold. Offers and sales of securities must be registered with the SEC or fit an exemption.
How it works
In its March 2026 interpretation the SEC sorted crypto assets into five categories: digital commodities, digital collectibles, digital tools, stablecoins and digital securities. The first three are not themselves securities; a stablecoin can be one depending on its facts. A digital security is a financial instrument listed in the statutory definition of 'security' that is formatted as or represented by a crypto asset. Tokenized securities come in two kinds: those tokenized by or for the issuer, and those tokenized by unaffiliated third parties, which may involve a separate security linked to the original. A non-security crypto asset sold under an investment contract is not a tokenized security.
Sources: SEC and CFTC: Application of the Federal Securities Laws to Certain Types of Crypto Assets (Release 33-11412, 2026), SEC: Crypto assets and the federal securities laws, SEC investor alert: Exercise Caution with Crypto Asset Securities · checked 4 October 2026
Often confused with
Related words
Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.