The persistent downtrend in the prices of digital coins this year has overshadowed the forward strides Blockchain & Cryptos have taken in this technological shift – let’s face it FUD gets much more coverage & attention in the digital media. Anyways coming back to the theme of decentralization which is the core asset of the digital ledger technology (DLT), is beginning to get noticed as a valuable tool in streamlining different processes specially in the financial services industry as evident from the chart below. Today we are going to look at one such segment of the financial services industry – the stock markets – and their integration of the DLT & Cryptos.
The first such pilot project is with the Malta Stock Exchange (MSX) where a Berlin based startup Neufund intends to offer a new product called ETO (Equity Token offering) where companies can issue tokens in a public or private setting with the ETOs amalgamating the advantages of IPOs (Initial Public Offerings), ICOs (Initial Public Offerings) & VCFs (Venutre Capital Funds). These tokenzied securities will be directly tradable on the first globalized decentralized Stock Exchange that Binance & MSX are coming together to set up. This partnership will ensure high liquidity of these equity tokens in a regulated environment. Availability of this kind of funding on a blockchain based exchange which is integrated with the established financial markets gives a new dimension to the world of digital finance.
Back in March, TMX group, a division of the Toronto Stock Exchange announced a partnership with Paycase Financial (Toronto based Crypto startup) via its subsidiary Shorcan Digital Currency Network, launching a brokerage service for parties interested to invest in Bitcoin & Ethereum. Paycase is the technology partner responsible for providing a platform for consolidated data from global Crypto exchanges. TMX has taken the pioneering step as far as North American markets are concerned & while Bitcoin futures are being traded on the CBOE in U.S and some big name banks have also shown interest in establishing Crypto trading desks, adoption has been generally slower down South on the back of regulatory concerns.
Across the Atlantic, Stuttgart Börse, Germany’s second largest stock exchange has recently rolled out plans to launch an ICO platform accompanied by a regulated Crypto trading venue. The ICO platform will provide the way for the issuance of the digital tokens apart from assisting in financing of these project, while the trading venue will provide the secondary market for people to invest in these digital assets within a regulatory framework. This comes on the heels of a no free Crypto trading app, Bison, whose blue print was launched by the same stock exchange back in May. The preceding two platforms will be ready to go live after the official launch of Bison in September.
Moving on to the other corner of the Globe, Shanghai Stock Exchange (SSE), World’s fourth largest stock exchange (over $5T in marketcap) is looking to incorporate DLT in its securities transactions. The market is planning to make good use of the transparency features of the technology. And while China’s blanket ban of ICOs & Crypto trading continues, exploration and implementation of the new technology under a controlled & regulated environment continues to gather pace. China is also the only country in the world who’s issuing official ranking of the Cryptocurrencies & blockchain platforms.
More recently, Singapore Exchange (SGX) in collaboration with Monetary Authority of Singapore (MAS) – the central bank of Singapore is getting ready to install Delivery versus Payment (DvP) – a blockchain based smart contract system to settle securities transactions. This will give the investors the ability to settle digitally tokenized securities across different blockchain platforms instantaneously. This initiative is an extension (or phase 2) of the Project Ubin launched in October 2016 to convert the Singapore Dollar to a digital format for clearing & settlement purposes across banks. The current phase would increase the operational efficiency of the stock exchange transactions apart from the larger integration of the financial ecosystem. The technology partners for the project include Nasdaq, Deloitte & startup Anquan. Keep in mind that Singapore has become a hotbed of blockchain & Fintech startup activity with unfavorable conditions in the neighboring China.
Other initiatives in smaller jurisdictions are spreading the Blockchain/Crypto movement. The British oversees territory of Gibraltar launched its own Blockchain Exchange (GBX) opening doors for zero fee Crypto trading in three Crypto-to-fiat pairs including BTC, ETH & its local Rock (RKT) token against the Greenback (USD). The smallish territory intends to eventually roll off this endeavor into a full-fledged ICO trading ecosystem like the one being introduced by the German stock exchange. The territory is also actively pursuing the enactment of blockchain regulations to provide a regulated financial environment for prospective companies. And finally Jamaica Stock Exchange (JSE) of the Caribbean islands has recently announced that Canadian Fintech startup Blockstation will be setting up a platform for trading Cryptocurrencies & digital assets on the JSE, as a first step towards introducing trading of digital assets.
Despite the fact that 2018 has been a rough year for Cryptcurrencies, the choice of trading instruments for the digital assets has grown – ETO, ETF, Futures, ETN, Crypto index funds etc. with blockchain based solutions being implemented across a wide spectrum of the globalized economy. Although there have been minor setbacks on the way mostly due to regulatory concerns & these might linger a little more but the future of Blockchain & Cryptos looks promising.