Crypto exchange listings on Nasdaq and Stock Tokens pave the way for a new and fair financial market that centers on Security Tokens and puts users first.
Technology is changing the world as we know it, and it’s changing fast! News of blockchain and cryptocurrency developments have taken almost a permanent new position in finance media and the mainstream. Crypto exchange Coinbase found itself at the center of attention with its $COIN listing on Nasdaq, signaling a new barrier crossed between the crypto and traditional financial markets. Conversely, FTX and Binance presented its first batch of ‘stock tokens’, allowing crypto investors to easily diversify with a surrogate approximation of traditional stocks. Meanwhile, regulators are starting to learn how these advancements are achieved and can fit into the existing financial paradigm.
The interplay between the two markets is escalating with a clear path towards a slow, yet steady, acceptance of blockchain’s ability to innovate processes in the traditional financial market.
However, points of contention are becoming evident, and our acquisition of shares in the NPEX stock exchange is already pre-empting potential pain points. The proliferation of stock tokens at exchanges is a significant step in the right direction. But each token represents a share in a stock corporation, but it is not a share. The next step will be to enable the same shareholder rights to security token holders. As it stands, stock tokens are operated from a ‘walled garden’, of sorts; investors cannot yet move tokenized securities to other exchanges.
For Dusk Network, this ability has always factored into our personal vision: true ownership and programmable finance - the ability to benefit from smart contract automation. The recent innovations that enable the wider availability of exposure to stocks are exciting but, as those familiar with security tokens know, just the beginning! The real disruptive potential of security tokens will be far larger.
Many of the financial markets' complex processes can benefit from real-time automation via smart contracts. This is a hard problem to solve, but a very rewarding one for projects able to capture a piece of the action. The industry is pushing ahead, and we look forward to seeing full-fledged security tokens come to fruition. Soon, exchanges and issuing companies will be able to benefit from smart contract automation, shaving off administrative costs related to dividend payments and reconciling their shareholder registry. Notably, private equity markets will become fairer and more efficient. On a grander level, the fragmented market of Stock Exchanges can truly become interconnected.
Dusk Network is building a strong blockchain backbone designed with financial market requirements in mind.
Providing Real Share Ownership on Blockchain
Can the benefits of blockchain be married to the rights of traditional stocks? Through the combined characteristics of Dusk Network and the NPEX stock exchange, we know they can.
“Blockchain and especially digital assets are one of the biggest opportunities in the financial markets for this decade. As NPEX is on track to be the digital asset exchange of the European Union, we obviously have to capitalize on these opportunities. We are working with Dusk Network on the digital roadmap to create the financial sector of the future. The fact that the first compliant smart contracts are ready to support the securities market is a very exciting step for all of us.” - Mark van der Plas, CEO of NPEX Stock Exchange.
Dusk Network and NPEX aim to improve the issuance and trading of securities. Through automation (and fractionalization), investors are able to invest in more types of securities, interact with them in new ways, and experience better shareholder engagement. We aim to open the ability for the general public to invest in the unicorns of the future or local companies at their own financial pace, no matter the size. All of this while complying with existing regulations, privacy and auditability requirements, and confidentiality agreements. This is achieved through Dusk Network technology and NPEX’s established legal license as a Europe-based stock exchange: NPEX operates an MTF license under MiFID II, making the exchange platform compliant with the strictest European regulations
We Haven’t Seen The New Normal Yet
The recent developments mentioned at the start of this article are certainly promising indicators of an improved interplay between old and new, traditional and blockchain. But there is still more growth needed before we’ve reached the new status quo for finance. Enabling true stock ownership, with the freedoms and rights this entails, through usage of tokenized securities, is a lot of hard work. It will require navigating both the traditional and the innovative, but it’s a vision worth pursuing with an eye on the future.
With our NPEX partnership, we hope to offer a glimpse of the new financial future through upcoming pilot programs and public initiatives.
NPEX was founded in 2008 and is short for ‘Nederlandsche Participatie Exchange’. Its employees are skilled and motivated specialists, active in the fields of New Business, Listing, Compliance, Operations, and Marketing. NPEX holds a MTF-license given by The Dutch Authority for the Financial Markets (AFM) and is under ongoing supervision of the AFM and De Nederlandsche Bank (DNB).