Regulated Security Token

Definition ∞ A regulated security token is a digital asset issued on a blockchain that represents ownership in an underlying asset, such as real estate, equity, or debt, and is subject to securities laws. Unlike utility tokens, these tokens confer rights similar to traditional securities and must comply with financial regulations in relevant jurisdictions. Their issuance and trading require adherence to stringent legal frameworks. This classification provides investor protection and legal clarity.
Context ∞ The legal and regulatory landscape for security tokens is rapidly evolving, with various jurisdictions developing distinct frameworks. Discussions often focus on the challenges of cross-border compliance and the technological requirements for managing regulatory obligations on-chain. Future developments include standardized legal definitions and technological solutions for automated compliance, facilitating broader institutional adoption.