Changelly Highlights Security Tokens and STOs

Changelly Highlights Security Tokens and STOs

Changelly, the cryptocurrency trading platform, dives into security tokens and STOs to provide an explanation to its users.

Changelly, the online cryptocurrency exchange, is highlighting security tokens, STOs, and what roles they have in the blockchain space. The first thing this article gets into is the difference between security tokens and utility tokens, and important differentiation that every blockchain user should understand. Utility tokens are cryptocurrencies that give their users access to a product or service, but does not give the token holders rights that they would received from investing with other financial products. Security tokens are cryptocurrencies that meet the definition of a Specified Investment, such as a share in a company or a specific debt instrument. Since these are treated as securities, they are fully regulated by the regulating financial body of the jurisdiction such as the FCA or the SEC.

One way to differentiate between the two is to consider the services that each type of token enables. Utility tokens offer access to a product or service offered by a company, while security tokens represent an investors ownership and financial rights through a blockchain based distributed ledger. Security tokens are traditional financial assets that have been repackaged so their features are verified through blockchain based transactions. Both types of cryptocurrencies are extremely important to the blockchain ecosystem, and both will continue to grow as the space matures.

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