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Security tokenization may be the next big use case for blockchain technology

Is stock tokenization the way of the future? In an interview with Raiffeisen Bank International, bankers leading their blockchain research center stated that, in fact, by 2030, most of the securities will have been tokenized. To gain a deeper understanding of how blockchain technology can transform traditional stock exchanges, Cointelegraph Research compiled a data set of all security token offerings and found that nearly $ 5 billion was raised in 2020.

Cointelegraph’s first report on security tokens explains how tokenization of bonds and stocks works, how many assets have already been tokenized, what returns they have provided, and how they are regulated in different countries.

A new opportunity

A recent trend is the self-custody of securities and the resurgence of financial instruments in the bearer. Tokenization of financial instruments allows investors to remove securities from an exchange and send them to a new exchange with a private key.

Stock exchanges can attract investors to deposit securities by offering interest on their deposits to lend their securities to the stock exchange, which in turn will lend the shares to other borrowers. Exchanges can also allow investors to use their securities as collateral for loans or margin transactions.

This will drastically change the demand for securities, as fewer investors will sell and trigger taxable events to acquire liquidity. It will also increase the demand for attractive securities, as a global group of investors will now be able to easily invest in securities in other countries.

Download the full report here, with graphics and infographics.

The daily trading volume in Binance and FTX of traditional tokenized shares, such as Tesla (TSLA), Coinbase (COIN), GameStop (GME) and Apple (AAPL), exceeds the monthly trading volume for all tokens of security in the most popular securities token exchanges. , Com tZERO, Merj, Open Finance Network and TokenSoft.

The daily trading volume of traditional token shares exceeded $ 4 million in one day on Binance and FTX in early May compared to $ 3.9 million for the entire month of April at tZERO, Merj, Open Finance Network and TokenSoft. The total market capitalization of the security witness is around $ 700 million. This could exceed $ 1 billion by the end of the third quarter of 2021.

The 93-page report carefully selects the industry experience of 13 authors in six countries, all of whom are working at the forefront of this capital market evolution. Ideas include how the tokenization of bonds by blockchain application specialist Dominik Spicher works at Crypto Finance AG in Switzerland and how regulations are affecting the markets for security tokens in different countries by PricewaterhouseCoopers and the general board of Block.one .

The report is co-edited by Cointelegraph Research and Crypto Research Report.

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