PRESS RELEASE: 5 Important Things to Know About Security Tokens

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The momentum that started in the crypto industry in 2017 is still on in 2018. ICOs have grown big and the capital being raised is quite huge in the venture capital industry as a whole. Crowdfunding movements are still strong and the interest in the market is higher than ever before. Companies and organizations are all striving to get a share in the market and government institutions are also formulating new regulations. Since this market is quite vibrant, you definitely need to know something about it . Here are some of the important things you need to know about the token market.

1. Understanding tokens

The first thing you should strive to know about the crypto tokens is their functions. Crypto tokens are basically asset units that serve many functions. There are tokens that represent different kinds of things and take many features. Some tokens are currencies while others are simply digital assets that represent ownership or shares in an entity. Tokens have also often been used as rewarding units for contributors in different crypto platforms.

2. Token classes

Secondly, you need to know the kinds of classes and categories that exist in the crypto token realm. Over the years, different kinds of classifications have risen but the prominent token classes today are utility tokens and security tokens. The utility token serves as a store of wealth. In the digital realm, this kind of token gives a user an access to a service or commodity. The security token, on the other hand, is more of an investment contract. Security tokens are similar to actual securities in the stocks world.

3. Regulation

Regulatory authorities in the different regimes around the world are yet to come into an agreement on how the crypto world should be regulated. The digital tokens are thus treated differently in different countries. Some authorities view them as assets and thus apply asset laws on them while others are regulating cryptocurrencies as new digital products. Issues of taxation, legality and the place of tokens in the world are thus still being considered.

4. The different regulation structures

Security and utility tokens have different forms of regulation. Considering that security tokens are viewed as actual investments, regulatory bodies like the United States SEC have put in place laws to regulate them. The regulations do not apply to utility tokens though. Even though utility tokens can sometimes be used as investments by different business people in the industry, they are not explicitly defined as investment assets. There are tests that have been established by regulatory authorities to determine which token is a utility token and which one is not.

5. Trading of tokens

Security tokens have grown so much that they will soon be traded as commodities in exchanges. Going by recent news, there are a number of online retailers that are looking forward to facilitating the trade of these tokens. Overstock, a key retailer is already in the process of developing a security token trading platform which will have proper licensing. When the trading of the tokens starts, a lot more potential will be unlocked in the digital market.

Please note: This article was submitted as a Guest Post by the third party. does not endorse any decisions. Readers should do their own research before investing funds in any financial asset or attending any presented event. We are not responsible for any profit/loss your decisions might lead to.

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