As the cryptosphere continues to reveal its full extent, understanding its different specs becomes essential. We’ve heard blockchain, we’ve heard Initial Coin Offering and these are some of the multiple terms that exist in the crypto dictionary.
A recent post expounded on the notions of “security tokens” and “tokenized securities”. To make things more interesting, how leaders within the world and community perceive of these tokens has also been provided. Here’s an overview of what’s been shared.
Definition and Advantages of of Security Token Vs Tokenized Securities
While one might jump to the conclusion that both words mean the same thing, the fact is they are two distinctive words.
Table 1: Summary of Security Tokens Vs Tokenized Securities. Information obtained from Securities.io.
|Security Tokens||Tokenized Securities|
|Definition||A type of technology that has similarities with traditional securities||When a traditional security that has been, as per the news outlet, “wrapped in the latest technology”|
Securities and Exchanges Commission (SEC) Role
The role of the SEC is to regulate security tokens. They have been having a rather difficult time understanding how to regulate cryptocurrencies due to the very closely tied but differing definitions. The news outlet further expounded the features of security as being: 1) investment of funds, 2) anticipated profit, 3) necessity of effort and 4) the involvement of a firm.
Cryptocurrencies to this day are being discussed in relation to regulations and how they should be handled. The SEC and other organizations have yet to come up with a sound guideline to follow. As per the claims made, the Swiss Exchange plans to create a platform specifically designed for tokenized securities, which will be regulated.
The Problem’s “Security Tokens” Not So Much “Tokenized Securities”
Regulating tokenized securities is not the problem here, as previously mentioned, the one thing that changes from traditional securities to this respective type is the technology involved. It is making sense of security tokens that have bothered many. What are said difficulties? They include trying to figure out what the associated risks are along with its consequences.
Three Possible Regulations Associated with Security Tokens
According to Securities.io, there exists three types of regulations that may be associated with security tokens, which include Regulation A+, Regulation D and Regulation S. Here’s another table just summarizing what they mean:
Table 2: Summary of Security of the different types of regulations one should be aware of. Information obtained from Securities.io.
|Regulation A+||Regulation D||Regulation S|
This is just foundational information that will help to differentiate the two terms presented. To have a complete understanding, readers are advised to further research to see how the aforementioned “notes” can become complete over time. This ensures that readers and investors have grasped the concept behind one investment strategy belonging to the cryptosphere in complete.