Tokenized Security Rules

Definition ∞ Tokenized security rules are the specific programmatic and regulatory conditions embedded within a security token, governing its issuance, transfer, and ownership. These rules dictate compliance with securities laws, such as investor accreditation requirements, transfer restrictions, and lock-up periods. They enable automated enforcement of legal obligations on a blockchain. These rules ensure that digital representations of traditional securities adhere to established financial regulations.
Context ∞ The implementation and enforcement of tokenized security rules are central to the development of regulated digital asset markets, frequently appearing in news about security token offerings (STOs) and institutional adoption. Ensuring these on-chain rules accurately mirror complex legal frameworks is a primary challenge. Future advancements aim to standardize these rules across various jurisdictions and platforms.