Kicking off 2019, there is a new component to the space emerging: security tokens.
The cryptocurrency market has seen a lot of volatility in the last year, particularly with the fluctuating value of Bitcoin and other key virtual currencies. Kicking off 2019, there is a new component to the space emerging: security tokens.
Tokenization is the process of turning real-world assets into digital tokens. Security tokens take this process to the realm of tradable assets, which are converted into digital assets using blockchain technology.
In a recent article, CNBC provided insight into security token offerings (STOs) as a method to issue and sell security tokens to investors. They come as an alternative to the controversial initial coin offering (ICO), and are different in that they are asset-backed and regulated within existing parameters.
CNBC also discussed recent activity in the security token space, including the launch of a new trading platform from Estonia-based crypto firm, DX.Exchange. The platform allows investors to indirectly acquire shares from Nasdaq-listed companies through the use of security tokens, where each token is backed by one share. The platform also makes digital stocks available throughout the day, even after markets close.
“By tokenizing stocks of some of the biggest publicly-traded companies like Google, Amazon, Facebook and more, we are opening an untapped market of millions of old and new traders around the globe cutting out the middleman,” DX.Exchange’s CEO Amedeo Moscato told CNBC.
STOs are expected to further integrate into the market within 2019 as they offer benefits such as reducing listing costs and making it easier to trade less-liquid assets. “In terms of timing, we hear that mid-2019 is the time-frame when most STOs will be able to ramp into the market,” Lex Soklin, partner and global director of fintech strategy at Autonomous Research, told CNBC.