The Silicon Review
Tokenization is all set to revamp the way we invest in assets and the act of tokenization is disrupting many industries. The textbook definition of tokenization defines it as a process of issuing a blockchain token (a security token to be precise) that will represent digital tradable assets. These tokens are offered through security token offerings to raise capital and then can be traded on a secondary market. The token culture is expected to be more efficient, improving fairness in the financial world. Tokenization can offer better liquidity, transparency, accessibility, and cheaper transactions for investors.
The Tokenise Stock Exchange is a trading name of Daxnet BB (Barbados) Ltd who is a fully regulated stock exchange in Barbados that exclusively focuses on tokenized securities. Part of the group Tokenise International Limited, they enable companies from across the globe to list both traditional and new asset classes, providing streamlined processes and frictionless market access for issuers and investors. These foundations create a full end-to-end solution for capital raising, primary issuance, secondary trading, clearing and settlement of tokenized securities, accessible to an international community of individual and institutional investors around the world. This enables the Tokenise Stock Exchange to fulfill its ambition to put financial inclusion and access to all people and industries at the heart of its objectives and give access to products and services that were previously inaccessible or simply too expensive to either list or invest in.
The Tokenise Stock Exchange concept was founded in 2018 and its roots are from London, England through a regulated broker dealer, which is part of the overall business.
In conversation with Mike Kessler, CEO and Founder of Tokenise
Q. How does tokenization help business to scale?
We provide innovative capital market solutions for SME’s and asset owners as well as access to a worldwide investor base. Services we provide:
Primary issuance - Security Token Offering (STO)
Securities can be tokenized and capital raises can be enabled via an STO. There is no restriction on the amount that can be raised.
Secondary market trading
Once issued, security tokens can be admitted to the exchange and traded.
Q. Who can list on the Tokenise Stock Exchange?
The Exchange is ideally suited to the SME sectors that are looking to raise capital and join a growing community of STOs. Anyone who is able to comply with the Exchange’s rules and the regulations of the FSC can list on the Exchange.
Q. How do you meet the regulatory requirements set in place for the industry?
The Tokenise Stock Exchange is a Self-Regulatory Organization under the Financial Services Commission of Barbados. The regulator has been heavily involved in helping define the rules that govern security tokens, and Tokenise has created and built the platform, ensuring that consumer protection in at the heart. Whilst adhering to FSC regulations we have also enhanced many of our systems controls to fall in line with European standards, we feel this enhances areas of the platform such as KYC/AML, suspicious transaction reporting, and security. The Tokenise Stock Exchange is a platform for digital securities; at this point in time, as the world of regulation is still deciding on its rules and laws on cryptocurrency, we do not deal with crypto payments or coins on the platform.
Q. How do you reduce investment threshold through tokenization?
Due to the low cost of trading on a blockchain-based digital platform, the cost of a transaction is dramatically reduced, and therefore the cost savings can be passed to investors. By having our own brokerage firm as part of the group, we are able to determine the price to provide direct market access, in the future we will be connecting up to a group of potential brokers, this will enhance the number of users being able to access the system itself.
Q. Can asset liquidity be enhanced through your services?
Over time, we expect to have significant enhancements to liquidity, and then to introduce market makers who will be able to make a price. Whilst we expect liquidity in the early days to be relatively low, we are keen on onboarding large user bases which will add to the potential liquidity pools.
Q. One of the biggest drawbacks to security tokens is the inability of non-accredited investors to own them. How can we overcome this challenge?
We are working closely with the regulator in Barbados to be able to allow restricted access to non- accredited investors. They will still need to go through KYC and AML, but we will be able to limit the size and exposure of their investments to enable them to participate appropriately according to their risk category. We are also looking at non-US investors who don’t have as strict rules applied to them.
Q. How do you market your services?
We are not on a full marketing drive at the moment, but very soon we will use the appropriate channels, including social media and partnerships, to start offering the services available to investors.
Q. Do you have any new services ready to be launched?
The Tokenise Stock Exchange is open for early registrations to the platform. Shortly we will launch the full exchange for primary issuance and secondary trading. We are however, talking to over 32 companies to list on the platform.
Meet the leader behind the success of Tokenise
Mike Kessler is the Founder and CEO of Tokenise. He has over 20 years’ experience in the financial services sector. His companies have regulatory licenses in both the UK (FCA) and in Barbados (FSC). Mike has spent his career in securities trading, compliance, hedge funds, and private equity and now stock exchange solutions using blockchain technology. Since mid-2018, Tokenise has been working with the regulator in Barbados to create the first fully regulated dedicated tokenized stock exchanges. Mike is regularly asked to attend tokenized security discussions, with regulators, governments, and exchanges to present on the activities within the marketplace as he has a fuller understanding of the bridge between the crypto and the regulated securities industry.