Security token milestone: First ever tokenised shares listed on a national stock exchange
The Seychelles MERJ exchange has won the first heat of a multi-part race towards wide use of tokenised securities.
The Seychelles securities exchange, MERJ, has become the world's first fully compliant and regulated national stock exchange to list a tokenised security. Or to look at it another way, this is the first time a tokenised security has ever come under the umbrella of an internationally compliant, regulated bourse.
The listing in question is 16% of the tokenised shares in a public offering later this year, recorded on the Ethereum blockchain.
Ethereum was chosen because at this stage it's the best supported protocol for these purposes, it says.
The broader goal is to use blockchain to streamline every element of a security's journey in the marketplace, including issuance, shareholder registry, compliance, distribution and voting, to ultimately reduce costs for investors and issuers.
It also helps break down the barriers between markets, and the barriers to entering the markets in the first place, not only by reducing costs but also by presenting a purely digital access point.
For an example of what this kind of development can do, consider the logistical nightmare of a company conducting a shareholder vote with paper securities. It has to essentially purchase information on its own shareholders, which will likely be at least partially inaccurate because the security may have changed hands multiple times via a complex web of intermediaries. It then needs to find a way of contacting or even distributing physical paper to these security holders.
With tokenised securities, all the necessary information is simply there.
Accepted regulatory standards... on the blockchain
"MERJ has fully leveraged its end-to-end ecosystem to deliver the world’s first publicly listed securities token," said Edmond Tuohy, CEO of MERJ Exchange. “We are combining the best of the old world and the new to provide a key piece of missing infrastructure for the growth of digital assets."
"Whether they're issuing tokenised or traditional shares, companies are not going to want to go to a jurisdiction that doesn't meet high international standards because it will attract greater scrutiny from global regulators," Tuohy added.
And while MERJ was the first to arrive, the development has still been years in the making.
"There is no regulatory arbitrage; people want clarity and simplicity, not added complexity. We’ve spent three years working with our regulators to build a robust and compliant framework for issuers wanting to leverage the benefits of distributed ledger technology within a publicly listed environment. Our listing today and the interest from other corporate issuers demonstrates the validity of what we have built."
Disclosure: The author holds BNB, BTC at the time of writing.
- BIS survey suggests Libra blindsided central banks, stablecoin use in EMEs
- Chamber of Digital Commerce sides with Telegram in SEC lawsuit
- Reserve Bank of India vs cryptocurrency: RBI cites Libra as point against crypto
- Digital Dollar Foundation: Why the former CFTC head is pushing for digital USD
- Understanding Australia’s proposed digital wallet regulations