OBSERVER│Bitcoin has seen over the past year both its value and popularity explode. It’s now seen as largely mainstream: Major financial names like PayPal and Visa, and increasingly more online retailers are accepting the digital currency. The blockchain technology that underlies their use is creating another opportunity in capital markets.
Using blockchain technology — which creates secure ledgers for digital transactions — digital securities exchanges enable instant settlement at a lower cost as well as fractional ownership of the underlying asset. Often these are alternative assets that would otherwise not be listed, such as private equity or hedge funds. Listing requirements are generally much lower than on traditional public exchanges, giving more fundraising opportunities for issuers such as young startups.
In 2020, the Japanese government amended its Financial Instruments and Exchange Act to include rules for security tokens.
In January 2021, Sumitomo Mitsui Financial Group and SBI Holdings announced a plan to launch the Osaka Digital Exchange in 2022, which they say will be the first private exchange in Japan to handle digital securities.
The Stock Exchange of Thailand announced in January 2021 that it would launch a platform for digital asset trading, “to widen business opportunities and revenue streams to the capital market’s operators while offering new investment alternatives to investors.”
HGX is operating under the Monetary Authority of Singapore’s regulatory sandbox — a local program that allows fintech players to experiment with services within a limited environment and relaxed regulatory requirements.
iSTOX, a private platform operated by local company ICHX Tech, which counts Singapore Exchange (SGX) and state investor Temasek Holdings as shareholders. In January, iSTOX said it had raised 50 million Singapore dollars ($37 million) to increase its overseas presence to draw more issuers and investors.
DBS Group Holdings is Singapore’s largest bank. It is launching a platform called DBS Digital Exchange for the issuance and trading of digital tokens backed by shares in unlisted companies, bonds, and private equity funds.
Another is planned by Swiss bourse group SIX and Japanese brokerage SBI Holdings, which jointly plan to launch in Singapore in 2022.
Asset digitization provides immense opportunities to reshape capital markets.AsianYouth Think Tank