Security Token

A token is a security when it represents an investment in someone else's effort with an expectation of profit. A token that entitles you to a share of a rental property's income and sale proceeds fits that description in almost every jurisdiction, so a tokenized property share is a security token whether or not the platform uses the phrase. The contrast is with a utility token, which gives access to a product, and with a cryptocurrency, which is money. Property tokens are neither. They are shares, loan notes or ownership entries that happen to be recorded on a blockchain, and the law treats them as the thing they represent.

Identity checks. A security can only be sold to a verified person, so every tokenized real estate platform runs a know-your-customer check before you can buy. Restrictions. Securities laws limit who can buy certain offerings. US platforms sell under exemptions that may require accreditation or cap how much a non-accredited investor can put in. Prypco Mint's primary offerings are limited to UAE residents. RealT excludes US investors. Where it trades. A security token can only change hands on a venue allowed to handle securities, which is why platforms run their own secondary markets rather than listing tokens on open crypto exchanges. Liquidity is real but contained. Disclosure. An issuer of securities owes you documents. Read the offering document for the structure behind the token before you read its yield.

On the Threeworld index, Reental issues security tokens on Polygon as either shares of a US property company or a Spanish participative loan. Mogul issues tokenized shares on Avalanche. Prypco Mint issues tokens on the XRP Ledger that mirror an entry on the Dubai Land Department title deed, under VARA's supervision. Lofty and RealT, marked coming soon, issue on Algorand and on Ethereum and Gnosis Chain. Stake and Arrived sell securities too, recorded off-chain. The regulation is the same. The token is a different way of keeping the register, as the guide to tokenized real estate explains.