Oddity Tech Ltd., a New York-based online beauty-care retailer, is going to offer investors a new kind of security that combines traditional equities with the digital infrastructure behind cryptocurrencies.

Oddity, which sells products through its Il Makiage and SpoiledChild brands, is offering a so-called security token. The token converts into a share of stock in an eventual initial public offering at a 20% discount to the IPO price. Proceeds will be used for general corporate purposes, the company said.

Unlike other tokens, though, the Oddity tokens won’t be tradable after they are issued, the company said, a condition that will be programmed into the contracts governing them. That means investors would have to wait for the IPO to sell and realize any profit.

Security tokens are assets that are created and traded in the same way as bitcoin and cryptocurrencies in that they exist wholly on digital platforms. The difference is that they are offered as regulated assets and can have specific characteristics programmed into them, such as equity ownership or profit-sharing. The assets have similar characteristics to stocks and bonds.

Oddity is one of the first non-crypto-focused companies to offer such a security, and the first to tie one directly to equity ownership.

Security tokens could in the future become an important tool for companies looking to raise capital, Oddity Chief Financial Officer Lindsay Drucker Mann said, but the lack of familiarity is an impediment.

Security tokens can be offered through exemptions for small businesses in the Securities and Exchange Commission’s rules, but most companies and issuers aren’t familiar with the process and are reluctant to get involved, Ms. Drucker Mann said.

“It will not happen unless you have bottom-up issuers and other advocates doing it, working through regulated channels,” she said. 

The token offering is open until May 11, at which time it will price, similar to the process for a traditional IPO. The offering is being conducted under the Regulation D guidelines of the SEC, meaning this is a regulated offering available only to accredited investors.

The offering will be issued through a blockchain-based platform called Securitize, an SEC-registered transfer agent that has been helping develop the market for security tokens.

While Oddity declined to comment on an IPO, media reports have said the company has been preparing one. It has raised $130 million in venture capital, according to Crunchbase.

The concept behind security tokens emerged after the 2017 bubble in what were called initial coin offerings, which were digital tokens sold by companies and used to raise capital, much like a stock offering, but without being regulated or registered and without any ownership stakes or dividend payouts.

At their peak, companies issuing

ICO s had a collective $24 billion in their treasuries from the sales of the tokens. But the mania quickly died out after an SEC crackdown.

While the ICO boom quickly crashed, the idea behind it didn’t die. Some companies took the ICO concept and rejiggered it to create digital assets that would be sold in a regulated environment like other securities.

The market for these tokens is still small and largely illiquid, but growing. There are fewer than 200 security tokens trading on various platforms, according to the website Security Token Market. Some are tied to trading platforms like tZero and INX. 

Others are tied to specific pieces of real estate, like the St. Regis Aspen Resort in Colorado. One security token offers an ownership stake in the famed Millennium Sapphire. 

One year ago, the crypto trading firm INX conducted a public offering for a security token tied to the company itself. The token, which trades on the company’s exchange for security tokens, entitles holders to a proportionate share of 40% of the company’s net cash flow.

The INX token started trading last July at 90 cents. It traded as high as $3.60 in September, but on Monday was back at 90 cents, according to Security Token Market.

Write to Paul Vigna at Paul.Vigna@wsj.com