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Security tokens are blockchain-based representations of ownership rights in underlying assets such as stocks, bonds, real estate, or fund shares. They prove ownership and enable transfer on the blockchain without traditional intermediaries. Security tokens carry the same legal rights and regulatory obligations as traditional securities, with faster settlement and programmable compliance.
Asset is selected and legally structured for tokenisation. A token is issued on a blockchain representing ownership rights. Investors complete KYC/AML verification and receive tokens. Tokens transfer on the blockchain instantly when ownership changes. Dividend distributions and corporate actions execute automatically through smart contracts, and settlement is immediate.
Yes. Tokenized securities remain subject to securities regulations in their jurisdiction. The SEC treats them as securities under the Securities Act and the Exchange Act. MiCA in Europe and similar frameworks globally impose registration requirements, disclosure obligations, and investor protection rules. Regulatory pathways are emerging globally for compliant tokenisation.
Custody protects private keys that control token ownership, automatically enforces governance policies, segregates assets by client, maintains regulatory audit trails, and prevents unauthorised token transfers. Institutional custody providers like Liminal Custody offer governance-focused infrastructure with multi-signature controls and operational resilience for managing institutional tokenized securities.
