Creating Security Tokens: A Comprehensive Guide

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While we posted a more comprehensive guide for tokenization of real estate earlier in the year, I believe it’s important we focus on the step needed to create a generalized security token. As you know, we have been adamant that the future of asset management will be on the blockchain. 

So here are the main steps to creating a security token:

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1. Defining Specific Rights: Start by outlining the specific security token features your token will encompass. These could be anything from voting rights, profit shares equity dividends or asset ownership. Make sure that the outline reflects priorities directly aligned with company goals and business model. 

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2. Select Jurisdiction: Conduct a search for the optimal jurisdiction for which you will operate. Each jurisdiction has different rules and regulations for tokenization. This is a critical step in the process to ensure your security token remains within the law. 

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3. Decide on the Optimal Token Platform: Choose the best security token platforms for your security token model. Some of the evaluation criteria for a platform will include regulatory compliance, liquidity options and the investor management capabilities of the platform. This choice will have major implications for the lifecycle of your security token from creation to trading. 

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4. Create the Security Token: After selecting the appropriate platform, the next step is creating the token. Before a token can be created, you need to deploy a smart contract on a blockchain network, one able to fully satisfy both regulatory requirements and business objectives related to your goals. 

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5. Security Token Launch: Now you’re ready to launch your Security Token Offering (STO), which involves marketing your security tokens to potential investors, while following regulatory rules. Creating well-structured marketing campaigns that reach the right targeted audiences. Ensuring compliance with regulatory laws in this phase is vital and keeping track of distribution and ownership of tokens can make or break your project. 

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Remember, creating a security token involves complex legal and technical processes. We recommend you consult with legal and blockchain experts (like Smartblocks) to ensure a smooth and compliant STO.