What is the difference between security and utility tokens?
STBX and STBU are two tokens in the Stobox ecosystem. These are STBX, a security token, and STBU, a utility token. What is the difference between them, and what do security vs utility tokens represent?
Security Token vs Utility Token
Security tokens are companies’ securities put onto the blockchain. It can be equity, bonds, revenue share, et cetera. STBX is a security token, a tokenized dividend share of the US company Stobox Technologies Inc. You can buy STBX via DS Dashboard after registration and passing KYC.
Security token features
- Applicability for private companies. As private companies’ shares are not traded on stock exchanges, raising capital and achieving liquidity is difficult. Security tokens can be traded on the crypto exchanges while there’s even no need to go public.
- High regulation. As the SEC (Securities and Exchange Commission) recognizes security tokens as securities, it regulates them as such. As SEC’s primary goal is to protect investors and ensure transparency in the market, it keeps a strict eye on STOs;
- Giving dividends and/or voting rights depending on the offering;
- Purchase limits prevent money laundering and monopoly control;
- Can be listed on centralized exchanges (CEX) or decentralized exchanges (DEX).
Utility tokens are tokens used inside the companies’ ecosystem. With the help of utility tokens, you can pay for gas, companies’ services, and commissions, or they can be loyalty points. In turn, STBU is a utility token that you can use in the Stobox ecosystem, participate in company activities, and get benefits. You can buy STBU on Gate.io.
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Utility token features
- Low-regulated in most countries. As utility tokens are not, in fact, securities (like security tokens are), there is less red tape in their issuance and sale process.
- Require passing KYC on most exchanges in order to be traded, according to FATF regulations;
- No purchase limits (unlike security tokens);
- Allow receiving services or goods inside one ecosystem;
- Can include benefits or preferences;
- Can be listed anywhere.