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The opening of a digital stock exchange next week will allow investors to operate in companies including Apple Inc., Facebook Inc. and Tesla Inc. outside the United States, even when stock markets are closed.
DX.Exchange, which has offices in Estonia and Israel, will offer digital tokens based on a share of 10 companies listed on the Nasdaq with plans to expand to the New York Stock Exchange as well as Tokyo and Hong Kong. Every digital security is backed by a regular fee and the holders will be entitled to the same cash dividends, even if the companies themselves are not involved.
Bloomberg News
The offer of virtual shares of the exchange will provide an investor appetite test for products seeking to improve traditional financial markets using cryptocurrency technology. DX will offer digital shares, or tokens, based on real shares purchased and held by the partner MPS MarketPlace Securities Ltd. The tokens will be based on the Ethereum network, with the amount corresponding to the DX exchange demand.
Digital securities could offer advantages over traditional actions because they can be traded even when stock exchanges are closed and traders can choose to buy fractions of a share. They could also offer foreign investors the opportunity to buy and sell US shares that they might otherwise struggle to gain access to.
Although US regulators oversee the initial listing of DX shares, CEO Daniel Skowronski said he does not need US permission to offer this service because DX does not operate there. The company claims to be authorized by the Estonian financial intelligence unit with full authorization to operate in the European Union.
"We saw a huge market opportunity in symbolizing existing titles," said the CEO via email. "We believe this is the beginning of the merger of the traditional market with blockchain technology, which will open up a whole new world of trading old and new titles alike."
The US Securities and Exchange Commission, which regulates US negotiations, declined to comment.
Tokenization is a development increasingly discussed among cryptocurrency enthusiasts that involves the transformation of real assets into digital contracts that use blockchain technology. While security tokens have been discussed for some years, they could be a key growth area in 2019, as entrepreneurs are looking to transform everything from fine art and real estate to securities and bonds.
MPS MarketPlace, which is authorized by the Cyprus financial regulator, will hold stocks on behalf of the token owners and keep them in a segregated account, Skowronski said. The offer of DX complies with the European Mifid II directive, he said.
Bloomberg News
