So, ICON recently announced that it has released a new security token standard.

Broadly speaking, there are two kinds of tokens in the blockchain space: utility tokens and security tokens.

Utility tokens – such as ICX – give you access to particular services.

Security tokens, on the other hand, needn’t be tied to a particular service. Instead, security tokens represent a particular asset. In short, they function much like shares in a company. With security tokens, you can tokenize real world assets – or parts of real world assets – such as real estate, art or precious metals such as gold, making them liquid.

But the big takeaway here is that security tokens are much more heavily regulated by national governments.

On the down side, national regulations usually dictate that you have to be an accredited investor to buy securities. To give you an idea of what this means, to be an accredited investor in the United States, you should have a net worth of at least US$ 1 million or an annual income of at least US$200,000 over the least two years and expect to make at least that this year.

On the up side, the added legal protections make it less likely that you’ll get scammed, Lehman Brothers notwithstanding.

To quote from The Tokenist, “For those coming from more traditional forms of finance and investing, security tokens offer the speed and ease of blockchain without sacrificing strong legal protection. For those with a background in blockchain investing, security tokens bring enhanced protection against fraud and misselling.”

The Block recently ran a very good, very simple rundown of the misconceptions and actual benefits of security tokens – read it at your own leisure.

Anyway, let’s return to ICON’s IRC16, the platform’s new security token standard. In short, this standard enables third parties to develop tokens representing their assets using ICON’s public blockchain network. The four features of the of the new standard – Check for Token Transfer, Token Control by Operator, Document Management, and Partition – ensure that these tokens comply with national laws and regulations to combat money laundering and protect investors.

In its announcement, ICON said it hopes security tokens will increase the liquidity of high-value assets and expand the size of existing investor pools over the long term. It also said the use of smart contracts would make the trading experience simpler.

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