Tokenization, Bitcoin ETF, Bitcoin futures and security token offerings (STO) are the new keywords that investors are considering will lead the next bull wave in the cryptocurrency market. The debate was further fuelled by a newly launched digital trading platform DX.Exchange regulated by Nasdaq’s Financial Information Exchange (FIX) protocol and has raised the eyebrows of investor across traditional as well as the crypto market.
— DX.Exchange (@DXdotExchange) January 7, 2019
Why Tokenization on top of Nasdaq’s Matching Engine is a next big thing?
DX.Exchange which was launched on January 07, 2019 has committed to offering ‘Tokenized stocks of Nasdaq’s top companies including Apple, Tesla, Google, Facebook, Intel and unlike”.
Accordingly, any investors can stresslessly purchase the ‘stocks of Nasdaq listed companies’ in any denomination of cryptocurrencies and fiat money – even after the closing hours of stock markets. The process named these stocks as the ‘security tokens’.
To understand why it is huge news, let’s delve in…
During an interview, CEO of DX.Exchange, an Estonia based crypto firm extended support to major cryptocurrencies. The discussion did reveal trading pairs of LTC and XRP on the newly launched exchange – LTC with trading pairs of BTC, ETH, USD and XRP with BTC, ETH, EUR, JPY, USD respectively.
Addressing the potentials of the platform, Amedeo Moscato, chief operating officer of DX. Exchange told CNBC,
“The crypto community has been talking about security tokens for well over a year now without much progress, so we think the impact will be huge,”
He further revealed that tokenizing the stocks of biggest financial players, DX.Exchange is encouraging all awaiting old and new traders to participate in the market. Such model enables trading for everyone by cutting out the need of middleman Besides the convenience and cost reduction, DX.Exchange offers higher liquidity of the stocks with its ‘trade around the clock’ ability.
With the fact that ‘Nasdaq’s matching engine technology’ is already been used across 70 plus international markets, few experts believe it would be the backbone for ‘better investment option than investment in crypto’. It is also noticed that ‘tokenization or security tokens offering can be the new potential source of fundraising for firms – startups as well as large firms’.
Are there any red signals?
In a mail sent out to CNBC media, a fintech company’s co-founder and chief executive, Dan Doney questioned over the regulatory stance of DX.Exchange trading model. Besides encouraging the convenience and liquidity that platform offers, he also raised key questions which might many of us have ignored. He remarked,
“We’re unsure and even skeptical of DX. Exchange’s model because we don’t think that it’s acceptable to list tokenized shares of a company without shareholder consent,”, adding,
“However, we do think that the model can meet regulatory standards if executed properly.”
Is ICO fever over? Will STOs live up to expectation?
China and South Korea have already banned ICO practices within the terriroty. Significantly, a recent study revealed 80 percent of ICOs conducted in 2017 were scams.
Since ICOs appeared as the ‘controversial topic’ from last two years, a new concept emerged in the market as ‘security tokens’ and as such the crowdfunding process can be called as ‘security token offering’ (STOs). Dan Doney stated the key difference between ICOs and STOs is;
“Security tokens use blockchain to allow for efficient transactions like cryptocurrencies, but are different in all other ways,”
While ICOs are not regulated, security tokens are said to be automated regulatory compliance. Moreover, it has instanced with the stabelcoins, pegged by fiat currencies. Doney further added,
”(They) emphasize regulatory compliance, automated regulatory reporting, and represent share interest in value-producing assets. This ultimately provides stable value versus the volatility of crypto.”
Do you think Tokenized stocks the next big thing for crypto space? Do you think it can be the next biggest revolution in the financial market? Share your thoughts with us in comments.
Sunil is a serial entrepreneur and has been working in blockchain and cryptocurrency space for 2 years now. Previously he co-founded Govt. of India supported startup InThinks and is currently Chief Editor at Coingape and CEO at SquadX, a fintech startup. He has published more than 100 articles on cryptocurrency and blockchain and has assisted a number of ICO’s in their success. He has co-designed blockchain development industrial training and has hosted many interviews in past. Follow him on Twitter at @sharmasunil8114 and reach out to him at sunil (at) coingape.com