Understanding the Different Areas of Digital Currency
To understand the concept of security token exchanges better, let’s revise a few key terms associated with the crypto world.
ICO
An Initial Coin Offering or ICO sells utility tokens in exchange for cryptocurrency to raise capital. They are unregulated securities.
Cryptocurrency Exchange
A cryptocurrency exchange is where you can buy, sell or trade cryptocurrencies using another cryptocurrency or a fiat currency such as USD, Yen, or Euro.
STO
A security token offering sells security tokens that, unlike utility tokens, are backed by tangible assets. STO investors also get voting rights or revenue distribution rights.
Cryptocurrency
Cryptocurrency is a digital currency. Blockchain is the bedrock of all cryptocurrencies. It is globally accessible, decentralized, irreversible, anonymous, and extremely secure. There are more than 2000 cryptocurrencies with Bitcoin dominating half of the market share.
STE
A security token exchange platform or STE allows investors to sell, buy, and trade security tokens in a fashion similar to the conventional stock exchange.
What Are Tokens?
Tokens are the building blocks of STEs. Although people may use the terms "cryptocurrency" and "token" interchangeably, they are different. Unlike a cryptocurrency, security tokens bring enhanced protection against fraud and miss-selling.
There are two types of tokens
Utility Tokens
Utility tokens usually provide access to an exclusive utility or service. Tech startups often use them as crowdfunding means to raise capital through ICOs. Essentially, investors pay now for access to a company’s product or service in the future.
Security Tokens
Security Tokens usually represent tangible assets such as shares, dividends or real estate. Comparable to traditional securities, they often fall under security regulations of a country.
Difference between Utility Tokens and Security Tokens
Utility Tokens
Security Tokens
Utility Tokens Security Tokens Provide access to a service or utility. For example, Filecoin which provides users access to its decentralized cloud storage.
Not regulated, prone to scams
They are not investments, so there is no profit guarantee although their prices may appreciate
No powers or rights to investors
Provide ownership of the asset. For example, Aspen Coins allowed investors an indirect fragmented equity ownership stake in the property.
Regulated, considered a safe investment option
Being investments you can expect profits, especially in the long run
Investors can vote and decide how company works
Difference between Cryptocurrency and Security Tokens
Cryptocurrency
Security Tokens
It is blockchain-based electronic money
Each cryptocurrency has its own Blockchain
Cryptocurrency is convertible across different currencies
It represents an asset or a utility
It resides on top of another Blockchain
Security tokens need to be traded, sold or bought in their own ecosystem. However, you can use fiat and crypto to purchase them for the first time.
Difference between ICO and STO
Not backed by a tangible asset
Not regulated
No entry barrier for investors
High risk of scams as they are not regulated and not backed by real assets.
No protection for investors
Not an investment
Backed by a tangible asset
Regulated by SEC
Currently restricted to accredited investors
No risk of scams as they are regulated and backed by real assets.
Legal protection for investors
Offers a digital form of investment
Difference between Cryptocurrency Exchange and Security Token Exchange
Cryptocurrency Exchange
Security Token Exchange
Buy, sell, and trade cryptocurrencies
No need for smart contracts
Buy, sell, and trade security tokens
Makes use of smart contracts for trading
Difference between Cryptocurrency Exchange and Security Token Exchange
Cryptocurrency Exchange
Security Token Exchange
Buy, sell, and trade cryptocurrencies
No need for smart contracts
Buy, sell, and trade security tokens
Makes use of smart contracts for trading
Valuation of a Security Token
To make a security token tradable, it must render a value. However, as the entire security token ecosystem is in its infancy, there is a lack of universal valuation process. Right now, everyone uses their own set of rules to create a valuation.
As a security token is a combination of crypto and an actual asset, you must consider both attributes when determining the value of an asset.
Crypto Factors
You can use any of the crypto asset valuation frameworks in circulation today to determine the value of various factors associated with the crypto nature of a security token. Some of the leading valuation models use a simple formula: M =PQ/V It takes into account the following crypto factors -
- Size of the asset
- Velocity of the asset
- Price of the tokens being provisioned
- Quantity of the tokens being provisioned
Asset-based Factors
Price of the Underlying AssetThe underlying asset's value and token's values are proportional, one increases with the other.
Cash Flows or DividendsSometimes, the underlying asset offers dividends or cash income. In this case, the fluctuations in this cash income or dividend will affect the token’s value.
CollateralIf the underlying asset is using collateral, the value of the collateral will affect its value, which in turn, will affect the token's value.
RiskThe risks associated with the underlying asset will affect the token's value.
LiquiditySimilarly, an asset's liquidity will also affect the token's value. For example, more liquid assets such as stocks will gain value quickly, while tokens based on less liquid assets, such as real estate, will appreciate slowly.
Difference between Cryptocurrency and Security Tokens
Cryptocurrency
Security Tokens
It is blockchain-based electronic money
Each cryptocurrency has its own Blockchain
Cryptocurrency is convertible across different currencies
It represents an asset or a utility
It resides on top of another Blockchain
Security tokens need to be traded, sold or bought in their own ecosystem. However, you can use fiat and crypto to purchase them for the first time.
Benefits of Security Tokens
The traditional capital market is extremely restrictive. For example, a South African investor finds it challenging to invest in a small Canadian company and vice versa. With security tokens, however, cross country transactions become a lot easier.
Security tokens fall under various SEC regulations D, S, and A+. Under these regulations, you get access to accredited and non-accredited investors from the US and abroad. You also have to comply with KYC and AML norms, lending legitimacy to your security tokens.
Free access to global investors results in more liquidity. Investors across countries can easily buy, sell, and trade security tokens through licensed security token exchange platforms.
Blockchain-based security tokens operate in a peer-to-peer fashion, leaving no need for a middleman or a centralized exchange. You won't need a third party to verify investors or transactions. The use of smart contracts results in faster, secure and more economical transactions.
Unlike utility tokens, security tokens fall under federal regulations. The accountability factor lends more credibility to security tokens, especially from the investor's point of view.
Security tokens allow every investor to have fractional ownership of an underlying asset. You can divide assets into smaller units available for sale. Thus, investing in security tokens becomes a lot easier for small investors.
Each blockchain transaction is secure, verifiable, and reliable, making it more transparent compared to traditional transactions. This can reduce the chances of fraud, manipulation, and money laundering.
Limitations of Security Tokens
Only handful countries have specific legal regulations for security tokens. In most countries, the present (and often outdated) security-related laws govern STO and STE transactions. Ensuring compliance with complex securities regulations results in delays and risks.
At present, you can buy, sell, and trade security tokens via licensed exchanges, which are very few. Plus, the time lock period allows you to trade security tokens between qualified investors for a limited time period only.
The concept of security tokens and their application is still in its infancy and so is the market. As a result, trading volume and consequent liquidity are limited. Hopefully, with better legal compliance and awareness, the market will overcome these challenges.
Enter Security Token Exchanges
Many crypto enthusiasts view security token exchange platforms as the best solution to overcome the liquidity problem. Let's dig a little deeper into how a security token exchange works.
How It Works
Key Components of a Security Token Exchange
The exchange comprises an order matching engine that automatically pairs similar orders between buyers and sellers at the best market price. It also matches the different orders depending on the market and trading limits.
A smart contract is a computer-generated protocol that automatically triggers a verified transaction and completes it without any human interference. It makes each transaction trackable, secure, and irreversible.
Any cryptocurrency like Bitcoin, Ethereum or Litecoin or any fiat-currency like the US Dollar and the Chinese RMB can be embedded into the exchange.
A wallet is integrated to manage all security token transactions, which are automated. Users can also control fiat-cryptocurrency conversion manually through the in-built processing interface with the associated banks.
Any transaction between the buyer and seller using a smart contract goes to the escrow system. Once the responsible parties agree to the payment details, the escrow releases the asset without any delays.
The exchange platform integrates a payment gateway that allows users to buy and sell tokens using fiat currencies through credit cards, debit cards and other payment methods.
Security Token Exchange Ecosystem
Issuance platforms allow startups and business owners to tokenize and sell their real-world assets to global investors. Most platforms offer the technology to tokenize different assets, ranging from real estate to fine art.
For example, Ethereum (a brand from Polymath) is one of the leading security token issuance platforms with their own ST-20 token standard for token development. It also has tie-ups with exchange platforms such as tZero to allow immediate trading.
Brokers and dealers can buy, sell, distribute, and trade security tokens on behalf of their clients, providing the much-needed liquidity. However, you need to hire a licensed broker/dealer.
Investors are the clients that buy and sell security tokens with the aim to make a profit. There are two types of investors, accredited and non-accredited investors. Usually, accredited investors include high net worth individuals (HNWI) or financial institutions such as banks, insurance companies, and trusts. They can buy unregistered security tokens. On the other hand, non-accredited investors are the small guys that don't meet the net worth requirements by SEC or its equivalent.
Custodians and trustees are individuals or organizations that will hold the underlying asset in the name of the investors. Their job is to protect the asset from damage or theft.
Legal advisors comprise lawyers and law firms that provide investors, issuers, and other individuals in the security token exchange ecosystem with the required legal advice.
The actual trading platform is where all the action takes place using smart contracts. You can find primary and secondary trading platforms. Primary platforms offer both, issuance and trading services for security tokens, while secondary platforms offer only trading facilities.
Security Token Legal Compliance in Different Countries
List of Countries Welcoming Security Token Exchanges and Their Regulations
No specific regulations.
Established a regulatory sandbox for Fintech startups.
Regulated under article 2 of Law n. 6.385/76.
Subject to Canadian securities laws on case-by-case basis.
Regulated by Cayman Islands Monetary Authority (CIMA).
Regulated by Cyprus Securities and Exchange Commission.
Regulated by Estonian Financial Supervisory Authority (EFSA). All listing prospectuses must adhere to the Prospectus Regulation 809/2004 and EU prospectus directive 2003/71.
The Authorité des Marchés Financiers (AMF) introduced new ICO regulations in 2019.
No specific regulations, but companies must adhere to existing laws such as Banking Act, Investment Act, Securities Trading Act, Payment Services Supervision Act, and Prospectus Acts.
Subject to specific proposals for the regulation of token sales by the Government.
Securities and Futures Commission (SFC) is working on regulatory guidelines.
No specific laws yet. Securities and Exchange Board of India (SEBI) is in the process of setting up regulatory framework.
Futures Exchange Supervisory Board (Bappebti) is working on regulations for cryptocurrency exchanges and related taxation.
Israel Securities Authority offers a clear definition of what separates a utility token from a security.
No specific regulations.
Japan’s Financial Services Agency (FSA) will issue new regulations soon.
The Lithuanian Ministry of Finance has already issued crystal clear regulations covering crucial aspects of STO and ICO such as taxation, accounting, issuance, and compliance.
Rigorous regulations introduced recently.
Offers the most clear regulatory guidance. Three main laws include Malta Digital Innovation Authority Act (MDIA), Innovative Technological Arrangement and Services Act (ITAS Act), and Virtual Financial Asset Act (VFA Act).
A new Fintech bill was signed into law in 2018.
The Philippines Securities and Exchange Commission (PSEC) is close to issuing new initial coin offering (ICO) regulations.
Offers the most clear regulatory guidance. Three main laws include Malta Digital Innovation Authority Act (MDIA), Innovative Technological Arrangement and Services Act (ITAS Act), and Virtual Financial Asset Act (VFA Act).
A new Fintech bill was signed into law in 2018.
The Philippines Securities and Exchange Commission (PSEC) is close to issuing new initial coin offering (ICO) regulations.
Regulated by the Swiss Financial Market Supervisory Authority (FINMA).
In the process of defining national regulatory standards.
No clear regulatory guidelines. However, Thailand’s Securities and Exchange Commission (SEC) has reportedly clarified how existing laws can apply to crypto securities.
UAE's Securities and Commodities Authority (SCA) will introduce Initial Coin Offering (ICO) regulations in 2019.
Financial Conduct Authority (FCA) is yet to issue firm regulations.
Currently, security tokens are regulated under SEC's Regulations D, S, and A+.
Security Token Exchange Ecosystem
Banned
The People's Bank of China (PBoC) has taken a firm stand to ban everything associated with cryptocurrencies, which is unlikely to change in the foreseeable future.
Banned
Currently, cryptocurrencies are illegal in Bangladesh. As a result, security tokens also remain illegal in the country.
Under Heavy Scrutiny
Although not illegal, cryptocurrencies and security tokens remain under heavy scrutiny in South Korea. South Korean authorities continue to view all things associated with blockchain skeptically.
Banned
The war-torn country is unlikely to venture into the security token realm anytime soon.
Banned
There seems to be no light at the end of the tunnel as Omanian authorities show no intention to issue clear policies or guidelines to regulate digital currencies or assets.
The Best Places to Start Security Token Exchange
The country has already issued clear regulations covering all crucial aspects of security tokens, including trading and compliance. The country's crypto-friendly regulations have attracted global security token players such as DESICO. The company holds a brokerage license for the secondary trading of tokens.
Gibraltar is renowned for its crypto friendly regulations. Recently, Gibraltar Blockchain Exchange (GBX), a subsidiary of Gibraltar Stock Exchange (GSX) was set up to trade security tokens on its servers. Gibraltar is the first country to have a regulated security token exchange.
The global financial hub is making great strides in the regulated security token market. The Monetary Authority of Singapore (MAS) recently gave the green signal to CapBridge Pte Ltd to open a private security token exchange called 1X. It is one of the first few private exchanges that will be launched soon.
Malta is perhaps the most security-token-exchange-friendly country. The three laws governing security tokens in the country are:
- A. Malta Digital Innovation Authority Act (MDIA)
The MDIA act provides a legal framework for defining technical and economic aspects of Distributed Ledger Technology (DLT) platforms.
- B. Innovative Technological Arrangement and Services Act (ITAS Act)
It provides guidelines for creating, auditing, and certifying all software technologies concerning blockchain, smart contracts, and security token exchanges.
- C. Virtual Financial Asset Act (VFA Act)
It provides a legal framework for regulating any activity related to virtual financial assets such as ICOs, crypto wallet providers, investment advisors, and security token exchanges, among others.
The Swiss Financial Market Supervisory Authority (FINMA) regulates all the security and utility token-related companies and transactions in Switzerland. It offers guidelines on the classification of tokens into payment, utility, and asset tokens. In January 2017, Switzerland established a global hub for virtual currencies called Crypto Valley near the town of Zug.
In 2018, the Canadian Securities Administrators (CSA) published a further Staff Notice casting light on Securities Law Implications for security and utility token offerings. Taking its pro-crypto approach further on Feb 13, 2018, the Canadian Securities Exchange, an alternative stock market founded in 2003, signed an MOU with Kabuni Technologies Inc.
The Security and Exchange Commission (SEC) uses the Howey Test to define if an investment contract is a security or not. It has three
- A. Regulation D
- No registration with the SEC.
- You can solicit only accredited and verified investors.
- You have to fill Form D after selling the security tokens.
- B. Regulation A+
- You can sell SEC-approved security tokens to non-accredited investors as well.
- You can raise up to $20 million over 12-months in Tier 1 or up to $50 million in Tier 2 over 12 months.
- It requires intensive SEC reporting.
- C. Regulation S
- Exemption from the registration under Section 5 of the Securities Act of 1933.
- You can solicit only investors outside of the US and its territories.
- You must comply with the securities regulations of the country of the issuance.
Various experts have projected different growth expectations from the security token exchange market. Lou Kerner, Founding Partner of CryptoOracle and a notable angel investor known for investing in Facebook, thinks that security token market cap will top $10 trillion over the next seven to ten years.
On the other hand, Carlos Domingo, CEO of Securitize, a security token development company, believes the security token market will continue to expand in 2019, possibly growing 10 times its current size.
Currently, the global stock exchange market is estimated to have a capitalization of around $80 trillion. If the security token market captures about 10% of this traditional market, we are looking at a security token exchange market of worth $8 trillion at least.
When it comes to the tokenization of different sectors, the global real estate market alone was worth $280.6 trillion in 2017. Tokenization of just one-fourth (25%) of this market alone will introduce nearly $70 trillion in the security token market cap.
The acceptance of tokenization of various assets and services is on the rise despite the lack of knowledge about security tokens. According to a recent report by Research & Markets, the tokenization market size is estimated to grow from $983 million in 2018 to $2,670 million by 2023, at a Compound Annual Growth Rate (CAGR) of 22.1% during the forecast period.
Essentially, as the number of tokenized assets grows, the demand for exchanges to list and trade these security tokens will also increase.
While stringent KYC and AML laws are necessary to avoid fraud, these laws also vary from nation to nation. Owing to their complexity, a small investor from one country often finds it hard to trade security tokens listed on an exchange in another country.
Not many countries have specific laws for setting up legally compliant security token exchanges. While some countries such as Malta, Gibraltar, and Lithuania have set up the laws, getting the required license is tough. Currently, there are only a handful of licensed security token exchanges around the globe. However, the number will increase by the second or third quarter of 2019.
The traditional security exchanges have standardized application, issuance, and listing processes unlike the nascent STE market. Plus, most companies taking the STO route are small in size. Hence, they lack the legal and technical expertise required for listing their security tokens.
Most regulatory authorities are trying to fit security tokens into the existing security laws resulting in confusion among investors. For example, in the US, most companies follow Reg-D guidelines restricting themselves to only American accredited investors.
The secondary trading restrictions often lead to a low trading volume. In other words, most security tokens listed on the exchanges rarely see any action. However, crypto-native investors and small individual and institutional investors are stepping in to fill this gap in the security token exchange market. Their increasing participation is going to generate meaningful liquidity in the not so distant future.
The decentralized nature of security tokens makes them globally accessible. As a result, a security token exchange located in the US can allow investors from South Africa to trade tokens on their platform. Still, owing to the lack of awareness, the available target audience remains limited.
The potential available market includes -
Accredited investors are individuals with high net worth. In the US, an accredited investor is:
- An individual with $1,000,000 in net worth other than a Primary Residence.
- A member of the household earning $200,000 for the last two consecutive years and expecting it to continue in the current year.
- An individual with a spouse, earning $300,000 for the last two consecutive years and expecting it to continue in the current year.
According to this definition, 8.25% of all American households or around 10,108,811 households in the US were Accredited Investors in 2018. They hold about 70.28% of all private wealth in America, which comes to a staggering $45.5 trillion.
Non-accredited investors perhaps form the largest group of small investors, shunned by the present complex regulations and geographic restrictions. However, STEs listing security tokens approved under Reg A+ in the US and its equivalent in other countries can tap into these investors from across the globe.
Being the largest generation (35%) in the U.S. labor force and perhaps in the world, Millennials are the driving force behind many national economies. However, as they are paying more for rent, food, and other comforts, Millennials often find it difficult to access traditional investment assets such as real estate, stocks, and shares.
But, being tech-savvy, they are well aware of security tokens. This openness to technology and fractional ownership of a tokenized asset make security tokens a promising investment alternative to them. You can target Millennials to invest in STEs relatively easily.
Another market segment that you can tap into includes startups. Security token offerings offer a reliable alternative to the traditional crowdfunding options for raising capital investments. The same security tokens can be traded on your exchange platform.
Consultants and service providers are the individuals or companies offering various technical, legal, and financial services related to security tokens. As these individuals already know how security tokens function, converting them into potential investors is relatively easy. If not, they can, at least, function as the advocates of your exchange platform bringing in more investors.
Although 2018 has witnessed a tremendous momentum for the security token development, the STE development sector is yet to pick up pace.
Security tokens often provide early-stage startups with access to global capital. As a result, they are more likely to take the STO route. At the moment, tapping into this customer base is the best way to increase your revenue.
Security tokens often provide early-stage startups with access to global capital. As a result, they are more likely to take the STO route. At the moment, tapping into this customer base is the best way to increase your revenue.
Security tokens often provide early-stage startups with access to global capital. As a result, they are more likely to take the STO route. At the moment, tapping into this customer base is the best way to increase your revenue.
Real Estate Sector
The US-based tokenized real estate fund recently partnered with Polymath and CoinList’s ComplyAPI to raise US$50 Million.
St. Regis Aspen Resort in Colorado successfully raised $18 million by selling Aspen Coins through crowdfunding platform Indiegogo under Reg D 506c.
Under Regulation A, QuantmRE is also offering a security token tied to owner-occupied, residential real estate assets in the US. It has successfully secured $1M in 2018. It plans to list the EQRE token on a regulated security token exchange platform.
Real Estate Sector
MintHealthMintHealth, a decentralized health Platform-as-a-Service (PaaS) company, has created MintHealth Security Token (MHST) on the Polymath platform.
AgenusAgenus, an immuno-oncology company, has launched Biotech Electronic Security Token (BEST) endeavoring to secure up to $100 million.
Elio Motors intends to raise up to $25 million by launching ElioCoin under Regulation D. The token will be available for secondary trading on tZERO's security token platform.
Gab, a social network platform that supports free speech, used ERC-20 security tokens to raise capital. Currently in the Test the Waters Phase for Title IV investments on StartEngine, Gab has raised more than $5 million already.
Knowbella Tech intends to boost scientific collaborations through its open science collaboration platform. The company will allow institutional as well as individual investors to buy its Helix tokens.
RideCoin, a peer-to-peer ridesharing alternative to Uber and Ola is in the Test the Waters Phase for Title IV investments on StartEngine. It has raised more than $3 million.
NeufundNeufund, a Berlin-based company offering peer-to-peer solution for asset tokenization raked in 2.6M Euro recently. It offered FTH, an Ethereum-based token.
Current Market Performance for Security Token Exchange Development
Owing to the complex legal framework, you can extend your services to the accredited investors, startups, and (to some extent) even non-accredited investors.
As an exchange owner, your primary source of income will be market listings. You can charge the security token issuing company with a fee for listing their security tokens on your exchange. You can also enter into strategic partnerships with various issuance platforms such as Ethereum or Polymath to get exclusive trading rights for the security tokens they have developed.
Alternatively, you can also help STE owners to market their exchanges. They will need to promote their offerings aggressively as it is still a nascent market. Plus, many regulatory bodies are yet to define the legal framework in their countries, adding more confusion to marketing your STE.
You can use your expertise to put together a social media and programmatic advertising strategy for the STEs. You can also help create content, identify the right target audience, as well as recognize potential compliance liabilities for your social media campaign.
Another significant income source would be guest blogging. The global crypto community is supported by several passionate bloggers ranging from novices to experts. These bloggers are also highly likely to become investors or exchange platform stakeholders.
There is a strong potential to earn money in cryptocurrency as well as fiat money via blogging. The blockchain-based social platform Steem is already offering compensation for creating and sharing content.
Overstock/Tzero
Market Cap - $134 million
Investors - TEAM IN RESIDENCE and Medici Ventures
Features -
- ou can trade security tokens available through ICOs that are compliant with FINRA and SEC regulations.
- It uses two-factor identification, multi-sig addresses, and other preventative measures to protect investors.
- It provides stock inventory management systems, brokerage services, and smart ordering routing services.
Bancor
Market Cap - $35 million
Investors - NA
Features -
- Bancor charges no listing fees.
- You can list any ERC20 token including security tokens on the Bancor Network.
CEZEX
Market Cap - $20 million
Investors - Pinnacle Digital, IPE Global Pte Ltd, Phnom Penh
Derivatives Exchange, and SB Kaikaku Fund
Features -
- You can tokenize company shares, bonds, commodities, and real estate assets.
- It will be open to both, retail and institutional investors.
Templum
Market Cap - $10 million
Investors - SBI Holdings Inc. Japan, and others
Features -
- You can launch tokenized securities in the US market.
- It is an SEC-approved Alternative Trading System (ATS) a broker-dealer firm for private and unregistered digital assets.
- It is also compliant with the Financial Industry Regulatory Authority (FINRA).
Gibraltar Stock ExchangeThe Gibraltar Stock Exchange (GSX) established a subsidiary called the Gibraltar Blockchain Exchange (GBX), which is a security token exchange platform. It secured a license from the Gibraltar Financial Services Commission (GFSC) on 22nd Nov, 2018, becoming the first to own and operate a regulated blockchain exchange. Currently, it supports Bitcoin (BTC), Ethereum (ETH), and the exchange’s native Rock (RKT) token.
Australian Securities ExchangeThe Australian Securities Exchange (ASE) is planning to use blockchain technology to enable post-trade settlements. Investors will be able to trade underlying assets as security tokens on the new trading platform. It is essentially developing and testing its own blockchain system. Recently, however, ASE moved the launch date for the new exchange platform from the fourth quarter of 2020 to March-April, 2021.
The Malta Stock Exchange has created a fintech and digital asset subsidiary called MSX PLC. The MSX has signed an MOU with crypto exchange Binance to set up a security token exchange. Currently, Malta offers one of the most well-regulated and pragmatic legal frameworks for all things blockchain.
SIX Swiss ExchangeThe SIX Swiss Exchange is a primary stock exchange in Switzerland. It is also developing a blockchain-based fully-integrated security token exchange platform. The regulated trading platform will be fully compliant with the regulations of the Swiss financial regulator, FINMA. It will provide trading, settlement, and custody services, and will be rolled out in mid-2019.
London Stock ExchangeThe London Stock Exchange Group (LSEG) and UK's financial regulatory authority, the Financial Conduct Authority (FCA) have joined hands with Nivaura and 20|30 to issue blockchain-based equity in a UK company. The security tokens will be launched in a fully compliant manner. This move is considered as the first step towards developing a fully-compliant custody, clearing, and settlement system.
Security token exchange platforms provide the perfect environment to solve the liquidity problem. Regulated exchanges will protect investors as well as operators by reducing the chances of fraud. That's why STEs show a lot of promise, right now and in the future. They will play a critical role in developing the global security token trading network. Although this will take some time, investing in an STE right now will provide you with the early adopter advantage.
Australia-based ESPAY will provide you with all the technical help needed for security token exchange development. We have experience in serving customized solutions for a diverse range of security token exchange requirements. Connect with us now before taking the STE plunge.
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