Security Token

Definition

A Security Token is a digital asset representing a traditional financial security, such as a share, bond or stake in an investment fund, but issued and managed on a blockchain. It is subject to financial regulations in force, such as those of the AMF in France or the SEC in the United States, ensuring transparency and investor protection.

Key characteristics

A Security Token is backed by a financial asset and grants economic rights, such as dividends or voting rights. Its issuance and transfer are recorded on a blockchain, ensuring traceability and security. It also enables fractionalization of assets, making investment more accessible, notably for real estate and art.

Difference from other tokens

Unlike Utility Tokens, which provide access to a service, or Payment Tokens, used as a means of payment, a Security Token is directly linked to a financial asset and functions as a regulated digital security.

Benefits of Security Tokens

Thanks to smart contracts, they automate financial processes, reducing costs and delays. They facilitate global access to investments and improve liquidity on DEX secondary markets. Blockchain registration ensures transparency and security, limiting fraud risks and facilitating transaction management.

Regulatory landscape

Security Tokens must comply with local and international regulations, which represents a challenge for mass adoption. Authorities are working to adapt legal frameworks to foster their development while ensuring investor protection. By combining the strengths of traditional finance (TradFi) and blockchain technologies, these digital assets open up new perspectives for the management and accessibility of investments.

Security Tokens in club deals and real estate funds

In the context of collective real estate investment, security tokens represent the securities issued during a fundraising — shares of SPVs, bonds or shares of a dedicated entity. Each subscriber receives tokens recorded on the blockchain, offering full traceability and automated management of financial rights.

For real estate club deal operators and asset management companies, digitalizing the issuance and tracking of security tokens requires dedicated infrastructure. Fraktion natively integrates blockchain registration of securities (compliant with the French DEEP decree), share registry management, and automated distribution of returns — with no technical development on your side.

Operator, asset manager or fund issuing security tokens?

Fraktion equips you in 4 weeks with the infrastructure to issue, distribute and manage your security tokens — no technical development, no Excel, no integrations to build in-house.

• Issuance of securities on blockchain compliant with the French DEEP decree (Ordinance No. 2017-1674)
• Investor onboarding with automated KYC/AML in less than 48 hours
• Share registry and returns distribution managed from a single back-office

Request a Fraktion demo → or explore the full infrastructure.

See also:
→ Tokenization — the process of converting an asset into a token
→ SPV (Special Purpose Vehicle)
→ Our solution for investment clubs