What Is the Primary Risk Associated with Security Tokens?
The primary risk associated with security tokens is regulatory uncertainty and the potential for illiquidity. While they aim for compliance, evolving regulations across different jurisdictions pose a risk to their legal status and market viability.
Furthermore, because they are often traded on specialized, less mature platforms, they may not have the same level of liquidity as traditional securities.
Glossar
Security Tokens
Tokenization ⎊ Security tokens represent fractional ownership of tangible assets, often linked to sustainable projects or resources, enabling granular investment and enhanced liquidity compared to traditional asset classes.
Regulatory Uncertainty
Constraint ⎊ : Ambiguous or rapidly changing rules regarding asset classification or leverage limits directly constrain the design space for crypto derivatives products.
Evolving Regulations
Jurisprudence ⎊ Regulatory frameworks governing cryptocurrency, options trading, and financial derivatives are undergoing substantial shifts, driven by innovation outpacing existing legal structures and necessitating adaptive oversight.