What is a security token?

A security token is a security issued electronically on a blockchain platform according to a security token smart contract protocol.

This contrasts with a security issued in certificated (i.e., paper) form or in electronic form in a central database (e.g., Microsoft Excel, SQL).

Security tokens are also known as "programmable securities" because they can include features such as native transferability on the blockchain platform and compliance-related functions. These features allow for ongoing pre-emptive compliance without the need for intermediaries.