There appears to be a new buzzword in the cryptocurrency space- security tokens.
These digitized versions of traditional financial securities such as stocks and bonds could revitalize the crypto space say some analysts and executives.
The big difference that sets security tokens apart is that they fall within existing regulatory parameters and are backed by assets.
What’s Happening in the Crypto Space?
Within a year, Bitcoin has gone from $20,000 to just over $3,000, which has sent shockwaves across the crypto space.
Though hardcore crypto enthusiasts suggest that the price fluctuations have shaken the weak hands out of the crypto space, it is also true that the burgeoning crypto industry has suffered lower trading volumes over the past few months.
There have been regulatory concerns, and many governments around the world still haven’t made their minds up about the legal status of these cryptocurrencies.
In this challenging time, security tokens could help to reinvigorate the crypto industry.
Security Tokens enable existing financial securities such as stocks and bonds to be tokenized on blockchain.
Who Is Making Security Tokens a Reality?
On Monday, January 7, Estonia-based cryptocurrency firm DX.Exchange launched their trading platform which enables investors to buy tokenized shares of Nasdaq listed companies.
The stocks available include the likes of Netflix, Facebook, Tesla, and Apple through security tokens.
Every token is pegged 1:1 to the share of the company and is entitled to the same cash dividends as well.
Amedeo Moscato, chief operating officer of the platform, wrote about this service to CNBC, stating:
“The crypto community has been talking about security tokens for well over a year now without much progress, so we think the impact will be huge.”
He said that tokenization of securities would help to open an “untapped market” where traders can operate without middlemen.
Additionally, investors can trade outside of market hours with a wide range of currencies.
Dan Doney, co-founder, and chief executive of Securrency, a fintech firm, said that such tokenization would be more convenient as well as improve liquidity.
However, he was skeptical of DX.Exchange as the tokenized shares are traded without shareholders’ consent and he does not think that is acceptable.
Are Security Tokens Set to Be the Next Big Thing in Crypto? was originally found on Cryptocurrency News | Blockchain News | Bitcoin News | blokt.com.