Digital Security Tokens

Definition ∞ Digital Security Tokens represent fractional ownership or other rights in an underlying asset, recorded on a blockchain. These tokens are subject to securities regulations, offering features such as dividends, voting rights, or profit sharing. They merge traditional financial instruments with blockchain’s advantages of liquidity and programmatic functionality. Issuance and trading of these tokens are typically restricted to accredited investors.
Context ∞ The development of digital security tokens is a significant area within digital finance, aiming to tokenize a wide array of real-world assets. Regulatory bodies are actively defining frameworks for their issuance and trading, which is a central discussion point. Future expansion relies on achieving greater regulatory clarity and developing secondary markets with sufficient liquidity.