Security Token

The term securities refer to the fungible and tradable financial instrument that bears a type of monetary value. Essentially a security token is a digital form of the traditional securities. The examples of securities include bonds, stocks, options, ETFs and futures. Hypothetically, any of these things can be tokenized in order to become a security token.

This means a Cryptocurrency that is held by an asset such as real estate, gold, etc. For a security test, there has to be a Howey test. This allows one asset to get split into different users. The  initial stage for this is STO (“Security Token Offering”) and is considered a much safer option than ICOs.