What is it
A security token is a tradable financial asset that utilizes a blockchain to automatically store and validate transactions. Assets can be categorized as either real, financial or intangible. Digital financial assets may seem intangible, or non-physical, but in fact they do represent a claim of ownership of an entity, like a public company or commodity. Digital financial assets like security tokens help improve fractional ownership and liquidity.
XSC security token standard
Even though all transactions are automatically recorded, the blockchain does not replace securities law. Instead, the operational reality on the blockchain needs to comply with securities law, meaning the issuer of security tokens is in need for a specific level of control over the tokens. For example, in the case a company shareholder loses his private keys, he (or she) should still be able to exercise his ownership rights by law. The XSC Security Token Standard handles just that and provides all the necessary tools to be in control.
As a company or platform seeking to raise capital you benefit in multiple ways from Confidential Security Tokens
- Security Tokens are programmable, reducing cost by automation.
- Allow for easy integration by industry parties.
- Efficient to execute corporate actions such as dividend payments, or calling a vote.
- Automated audit trails reducing overhead.
On the other hand, investors benefit from Security Tokenization, because
- Security tokens are enhanced with compliance and legal logic, and reduce company’ overhead through automation. Giving them the potential to save administration and legal costs down the line, and be more liquid (traded easier) than assets recorded on paper.
- Fractionalization of shares is now cost-effective, making microtransactions feasible.
- Increase interaction of shareholders and voting engagement.
- Blockchain takes down data silos, enabling you reconcile and automate (fund) administration.