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Token Gesture or the Future of Securities?: Insights From Monday’s Security Tokens Realised

Hosted at Home House Private Members Club – Portman Square – London, ST Realised on Monday brought together expert speakers, invited press & media partners – including The Fintech Times’ CEO Katia Lang – and brand representatives to discuss a trillion dollar opportunity. The opportunity? Tokenised securities…

2018 will undoubtedly be remembered for the birth of an entirely new eco-system of platforms, exchanges, and funds, all looking to capitalise on the birth of tokenised securities. The advantages of tokenisation are, at least in theory, myriad. They include fractionalisation of larger assets, increased liquidity, lower issuance fees, and greater market efficiency.
However, the greatest benefit that security tokens provide an issuer is access to a global pool of capital. As these tokens can be sold and traded internationally (when compliant with regulations), they become more fairly priced and, therefore, attractive to investors. This offering is appealing to both institutional investors for its more recognisable structure, and to crypto investors for its technological innovation.

Tokenisation is becoming particularly popular amongst more traditional issuers and investors, enticed by the benefits of blockchain technology, as well as the crypto stalwarts, looking to hedge their increasingly volatile portfolios. Security token exchanges and enterprise are set to dominate the fintech skyline in 2019 but the precise nature of the fledgling subset asset class remains largely illusive. Katia Lang sat down with Ioana Surpateanu (Co-Head of European Government Affairs at Citi Group), Rob Nance (Managing Partner at CityBlock Capital) and Marina Titova (Head of Advisory at NKB Group) to discuss some of the subject’s finer points…

The first question Lang posed to her panel was, why has this wunderkind asset class been so slow to get out of the gates?

Rob Nance’s assessment was succinct, “The reason no one’s doing it is because it’s almost impossible to do today” he elaborated on the reasons why he thinks this is the case by saying, “Regulation is tough, the ability to take regulatory legal issues and take technology and bring them together is very difficult. Then to build an asset on top of it that investors want, these are three really big challenges in the space at the moment.”

Pressed as to what the future holds for fintech’s latest panacea, Nance was quick to manage expectations, arguing that, “This isn’t a revolution of the financial system, it’s a evolution of the current one.”Marina Titova  hopes to see tokenised securities being defined with greater clarity in the coming year so that the murkiness of this 2018’s ICO boom and crash can be avoided. She argued that a clear distinction needs to be made between the digitisation of traditional financial products and emerging “on-chain” blockchain assets, for the benefit of institutions and investors as well as regulators. Ioana Surpateanu echoed the need for clarity by adding that the most immediate problem facing the establishment of a tokenised security market is “regulatory clarity and regulatory collaboration” she concluded by saying that innovators in the area were anxiously waiting for state legislators to give them the “green light.” 

The key take away here was that whilst innovators and investors are full of bright ideas and aspirations, when it comes to tokenised securities, the ball is still well and truly in the regulators’ court and looks set to be there for some time yet.

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