Can Security Tokens Disrupt Traditional Finance?
Cryptovest
Published Jul 20, 2018 10:09AM ET
Updated Jul 20, 2018 10:20AM ET
Can Security Tokens Disrupt Traditional Finance?
The mainstream financial industry is starting to scratch the surface regarding the benefits of security tokens and the underlying blockchain technology. Banks, exchanges and payment companies are already developing test cases, working on new products and applying for patents all based on blockchain technology.
The nascent technology is being pushed further by the growing popularity of cryptocurrencies and tokens.
“Tokenization dramatically expands the ability to create new financial products,” according to a post by Luc Falempin, CEO of Tokeny, a blockchain company focused on simplifying token purchases and management for both issuers and end users. He added that the financial sector is about to be disrupted by a “force” bigger than many realize through securities tokens.
The growth in blockchain-based innovations is partly because of its revolutionary decentralized model that many industries find advantageous as it streamlines the business processes.
According to Falempin, there is a notable rise in securities tokens this year, which are perceived as a bridge between traditional finance and blockchain, offering equal benefits to both.
“The net effect of tokenized securities is to increase the liquidity of the underlying assets. Using an asset tokenization platform is becoming the de facto method to raise capital by issuing blockchain-based ownership claims.”, he said.
h2 Security tokens could dominate the cryptocurrency market/h2Many in the sector predict that securities tokens will dictate the digital currency market by 2025, which makes it easy to understand why some financial regulators are already working on critical infrastructure that will allow securities to be established as digital tokens.
Australia’s ASX is developing a “private blockchain” to tokenize securities for the domestic equity market. Coinbase, one of the largest digital cryptocurrency exchanges, is on its way to becoming the first federally regulated platforms for digital coins classified as securities after receiving the go ahead to acquire three licensed companies involved in security trading.
Circle Internet Financial Ltd., announced in June it plans to register as a brokerage and trading venue with the Securities and Exchange Commission (SEC) so it can assist investors to trade tokens that are classified as securities.
h2 Why is everyone into security tokens? /h2Security tokens are essentially liquid, digital contracts for fractions of any asset or security that already has value and is subject to securities regulations. By denominating fractional ownership of an asset in tokens investors are guaranteed that their ownership stake is protected on the blockchain ledger because it is more structured.
Get The News You Want
This article appeared first on Cryptovest
Written By: Cryptovest
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.