What is the security token exchange

  • Security tokens are basically investment contracts that are indicative of legal ownership in a physical or digital asset. Security token exchanges are a vital part of the security token ecosystem as they impart access to tokens and enhanced liquidity. At the moment, there is minimal regulation within security token exchanges that are currently operational. Therefore, there is a virtual absence of liquidity.

    Liquidity is one of the major advantages that security tokens impart in comparison to conventional tokens. A lack of liquidity often keeps prospective investors at bay. Liquidity will only become a reality when the forces with the crypto ecosystem are working in collaboration, these forces are inclusive of startups, conventional stock exchanges, corporate entities, and of course, regulators.

    Token exchanges are evolving, and firms that have traditionally refused to associate with both securities and tokens are starting to get involved. New revenue possibilities are always appreciated across the industry.

    Several jurisdictions have been paving the way for security token exchanges. While the United States is a popular destination for such projects, Europe provides relative regulatory stability and a perception that tokenization of assets is indicative of a major opportunity for Europe to equalize in the capital markets playing field for good.