What Is the Primary Difference between a Security Token and a Tokenized Stock?
A tokenized stock is a derivative that represents ownership of a traditional stock, typically traded on a blockchain and backed by the actual shares held by a regulated custodian. A security token is a broader term for any digital asset that qualifies as a security under financial law, which can include tokenized stocks, tokenized real estate, or digital bonds.
All tokenized stocks are security tokens, but not all security tokens are tokenized stocks.
Glossar
Tokenized Stocks
Fractionalization ⎊ Tokenized stocks represent the division of ownership rights in traditional equities into smaller, digitally tradeable units, leveraging distributed ledger technology.
Tokenized Stock
Asset ⎊ A tokenized stock represents fractional ownership in an underlying equity asset, typically a publicly traded company, but increasingly encompassing private entities or specialized investment vehicles.
Digital Asset
Asset ⎊ A digital asset, within the convergence of cryptocurrency, options trading, and financial derivatives, represents a quantifiable, tradable entity existing primarily in digital or electronic form.
Security Token
Token ⎊ A security token represents ownership or rights to an underlying asset, leveraging blockchain technology to facilitate fractionalization, enhanced liquidity, and programmable compliance.