Equity and Securities Tokenization

Jan 22, 2020

Share Article:

The securities market is a highly dynamic ecosystem. It’s a freeway for a capitalist economy that has maximized funding needs instrumental to an empire’s success. In order to meet funding requirements needed for businesses to thrive, businesses can either borrow the money or take on investors who have the capital.

Businesses then go to capital markets and proceed to issue securities in the primary market in the form of stocks and bonds by either Initial Public Offer (IPO) or Further Public Offer (FPO). The newly issued securities are then offered to a network of public investors to help pool enough capital for the business.

Equity and Securities Tokenization

Tokenization of assets or equity and other traditional securities involve the process of moving existing assets and ownership rights into the blockchain. The tokenized securities or movement of assets are designed primarily to widen the digital market and also enhance liqudity. It’s not introducing a new concept or prospect, but just a new and innovative distribution channel (entry into the digital sphere) which does not pose problems with regulations or approval.

Benefits of Tokenized Equity and Securities

Tokenized digital assets are considered more secure and reliable worldwide. This solves the pain points of businesses, investors, and consumers alike. Here are few benefits and advantages of tokenizing equity and securities:

  • Increased efficiency. Tokenized securities and other digital assets are more scalable, simplified, and efficient as compared to traditional assets. This helps reduce the necessary paperwork and also lower transaction costs.
  • More liquidity. Reduces capital friction and asset ownership which provides more liquidity and movement in your digital assets. You are able to trade or buy and sell digital assets anywhere at anytime with instant settlement.
  • More secure. Blockchain technology which is the underlying technology for asset tokenization is considered more secure and trustworthy as compared to the current technology used in traditional markets.
  • Legally compliant to regulations. This gives you peace of mind considering that security tokens are dubbed compliant and legalized in all aspects.

Digital securities and tokenization of assets is bound to disrupt the economy into parabolic proportions. All types of assets are seen to be tokenized in the near future. Apart from equity, bonds, and other securities, tokenization would soon cover commodities, funds, real estate, and other real-world assets.

Industries, businesses, markets and even governments will shape up and adapt into the tokenization movement . This happened with the internet revolution – and it is bound to happen for tokenization of assets. The somewhat insignificant or irrational markets today can actually create a huge financial impact in the future.

Share Article: