A security token offering (STO) is a type of public offering in which tokenized digital securities, known as security tokens, are sold on regulated exchanges. Tokens can be used to trade real financial assets such as equities or fixed income instruments and use a blockchain virtual ledger system to store and validate token transactions.

Security token offerings fix three critical problems in the private markets: investor access, liquidity, and price transparency. Security token offerings are poised to democratize access for individual investors for a variety of private assets that have been traditionally held by accredited and institutional investors. For issuers, STOs will bring price transparency and liquidity to asset portfolios that have suffered from monetization opportunities. Due to tokens being classified as securities, STOs are subject to extensive regulatory oversight.