They represent ownership in assets or company and provide token holders a share of returns on the asset or profits in the company. In essence, they are tradable financial assets. They are different from utility tokens; utility tokens are used in the ecosystem like Bitcoin, Litecoin and Ethereum.

Security tokens on other hand, provide ownership of the ecosystem. Offerings which involve sales of security tokens to raise funds are known as Security Token Offerings (STOs). Sapien Equity Token, Robinhood Casino and Solarstake are examples of STOs