What is a Security and Why is it Important?

A security is defined as a fungible, negotiable financial instrument that holds some type of monetary value.

At Miami Crypto Exchange, we understand the importance of financial literacy. Today, we would like to share with you some of the intricate details of a security as well as explain why these notions are of importance for both investors and organizations.

Details of a Security

A security is any investment product that can be exchanged for value and involves a level of risk. In order for an investment to be considered a security, it must be readily transferable between two parties and the owner must be subject to the loss of some, or all, of the invested principal. If the product is not transferable or does not contain a level of risk, it is not considered a security.

Below are some examples of what a security would be:

• Common Stock
• Bonds
• Mutal Funds
• Options
• Real Estate

In addition, there are two common types of securities. One is an Equity Security when refers to shares that you purchase in a company. The other is a Debt Security which in general refers to bonds or “investments in debt”. With Miami Crypto Exchange, investors will be investing in a Equity Security. The tokens issued are the Unit Certificates given to Unit Holders as they will buy in essence pieces of the organization.

Importance of a Security

In the cryptocurrency space, the notion of securities and why they are important has often been overlooked. However, with government regulatory bodies now examining the space more diligently, the emphasis on understanding securities and the importance of them has shown more brightly than ever before.

Securities and the various laws that surround them present a number of safeguards in place to help ease the level of risk posed to an investor. For this example, we will examine some of the functions of the U.S. Securities and Exchange Commission (SEC)and what role they play in protecting investors. Some of the safeguards that the SEC has in place are listed below:

• For one, in complying with the SEC, organizations that offer securities are forced to be transparent about their offering, company and other business information.
• Secondly, the SEC also looks out for accounting and other types fraud that could possibly harm an investor.
• Third, the SEC looks out for insider trading in various capacities to protect investors and to help ensure that companies are maintaining a high level of honesty and transparency.

Overall, Securities are a very important investment and it is critical to understand how they work and what regulations and laws are in place to help safeguard yourself as an investor.

To learn more about Miami Crypto Exchange and its Security Token Offering, check out our website at Miami.Exchange.

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