Executive summary: it is important to distinguish between utility and security tokens. Legislation for utilitytokens is tightening and under increased regulatory scrutiny. Legislation for security tokens is not. In fact, the regulators prefer security tokens and increasingly introduce regulation to support it.
DigiShares provides white label software for tokenization of real-world assets and soon an exchange to trade tokenized real-world assets. Assets are almost always tokenized in the form of securities, such that the end-product becomes a tokenized security – or a security token.
Security tokens represent a subset of the overall crypto market. Whereas crypto is generally unregulated and increasingly scrutinized by regulators, security tokens fall within existing securities regulation and are fully regulated within this scope. We differentiate between utility and security tokens. Utility tokens are tokens that in most jurisdictions are not regarded as securities. In the US, the SEC has said repeatedly that they view most tokens as securities.
The big financial services firms have recently shown a lot of interest in security tokens, because they see it as a safe and regulated way to realize efficiency improvements and increased liquidity with blockchain tech: