Traditional equities markets are evolving this week as Estonian-based DX.Exchange launches tokenized forms of popular American company shares. The platform developers aim to bring popular NASDAQ companies such as Apple, Facebook, and Tesla to its platform as cryptocurrency.
Each token represents a share in its respective company with added perks compared to holding these shares through a traditional brokerage firm. Customers of DX.Exchange’s tokens are stilled entitled to receive cash dividends should they hold these tokens, but they can also treat them as cryptocurrency at the same time.
The marketplace will allow 24/7 trading to customers, a major perk compared to the 9 to 5 hours of traditional stock exchanges. Customers are also allowed to purchase fractional shares — a benefit of cryptocurrency that allows those with less capital to begin investing.
Thanks to crypto and platforms like DX.Exchange, these barriers into the investment world are slowly fading away as technological advancements revolutionize trading.
Each token will be backed by DX.Exchange’s partner Marketplace Securities (MPS). The tokens will be formatted similarly to Tether, backed and pegged to their respective securities.
The technical details are not certain yet, but customers should be allowed to withdraw tokens onto hardware wallets. This concept does not truly allow ownership of the stock however, as the custody still relies on MPS to back the securities.
The platform, however, is not failsafe because it uses trusted third parties to guarantee stake in these companies not proof of ownership through private keys. However, interpreting this new platform as a means to an end in which companies see the demand for tokenized securities and begin to implement blockchain native offerings, eventually allowing private ownership and decentralized exchanges.
“We saw a huge market opportunity in tokenizing existing securities,” said For the time being,” said Daniel Skowronski, co-founder and CEO of DX.Exchange. “We believe that this is the beginning of the traditional market’s merge with blockchain technology. This is going to open a whole new world of trading securities old and new alike.”
Security Token Offerings are still in a legal grey area, but the demand for them may see companies working toward regulatory compliance in the future.