Security Tokens

37 Pages Posted: 15 Jun 2021

See all articles by Paul P. Momtaz

Paul P. Momtaz

University of California, Los Angeles (UCLA) - Anderson School of Management; University College London Center for Blockchain Technologies

Date Written: June 11, 2021


This chapter synthesizes the economics, law, and technology of security tokens and Security Token Offerings (STOs). Security tokens are blockchain-based investment contracts that are subject to securities law. Interoperability, fractional ownership, market liquidity, and rapid settlement are among the main reasons why security tokens are a primary catalyst for the digitization of finance. We also empirically compare STOs with Initial Exchange Offerings (IEOs) and Initial Coin Offerings (ICOs). STOs take longer and raise more funding, however, controlling for other factors, the valuation of STOs and IEOs is lower than that in utility-token ICOs. These findings suggest an interesting avenue for future research. Moreover, both the law and the technology of security tokens needs to address important challenges related to the competent jurisdiction in multinational activities as well as blockchain interoperability, scalability, and natural resource degradation, respectively.

Keywords: Security Tokens, Security Token Offering, STO, Decentralized Finance, DeFi

JEL Classification: G24, G32, K22, L26

Suggested Citation

Momtaz, Paul P., Security Tokens (June 11, 2021). Available at SSRN: or

Paul P. Momtaz (Contact Author)

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

University College London Center for Blockchain Technologies ( email )

UCL CBT UCL Computer Science
Malet Place London WC
London, London
United Kingdom

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