Security token offering
A security token offering raises capital by issuing digital tokens designed to represent investment rights, such as claims associated with debt, equity or other assets. The rights depend on legal documents and relevant law, not merely on the fact that a token is recorded on a distributed ledger. Consider investor protection, custody, transfer restrictions, liquidity, technology and regulatory risks. A token is not automatically a share, a currency or exempt from securities rules; the legal classification must be assessed for the relevant jurisdiction.
Worked example
A company proposes to issue tokens representing stated rights to cash flows from a project. Advisers assess the legal structure, investor disclosures, custody arrangements and whether a functioning secondary market exists.
Common mistake
Assuming blockchain recording guarantees the token's value or that every token offering is an unregulated initial coin offering.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | AFM | Direct | September 2026–June 2027 |