The UK’s national standards body BSI published the Security Token Specification, one of the sector’s first cross-chain standards. The specification is called PAS 19668 and was sponsored by blockchain advisory firm QRC. The steering group included the London Stock Exchange Group, OnChain Custodian, Tokeny, Blockckstream, BitGo, Prime Trust and numerous others.
Without a security token standard information tends to be presented in inconsistent formats, making the market inefficient and deters potential participants.
“Issuers will trust BSI-standards technology, with greater confidence in their technology provider or token distributor, this will drive adoption of STO fundraising activity,” said QRC CEO Shogo-Ishida.
PAS 19668 sets out the requirements for security token properties and specifies how to structure and present information publicized by token issuers across any distributed ledger. It also enables users to search across different blockchain networks for tokens with particular properties. For example, an individual looking to purchase tokens could filter security tokens based on attributes such as investor classification requirements, given some tokens may only be available to accredited investors.
While there is an industry group that explores token standards, the Interwork Alliance (IWA), its members lean towards the enterprise side of tokenization with the likes of Accenture, Microsoft and DTCC. Meanwhile, The IWA has a Token Taxonomy Framework and is exploring numerous different types of tokens, such as for carbon offsets. Whereas PAS 19668 applies exclusively to security tokens.
Although PAS 19688 is an individual country standard, it is targeted at both British and international security token issuers. There is a standard with a different scope in the works from the global standards body ISO.
“Standards are critical for the maturing of any new industry” said CEO of Onchain Custodian Alexandre Kech. “PAS 19668, which already leverages the ISO 10962 Classification of Financial Instruments (CFI) standard, will be powerful when used in combination with the ISO 24165 Digital Token Identifier expected to be finalised and available for us in 2021.”
Luc Falempin, CEO of Tokeny, which has a security token solution, believes that it’s “essential to facilitate the interoperability of solutions and to formalize the data.”
There are many other blockchain standards bodies, ranging from primary standards bodies such as the ISO to industry focused initiatives. The World Economic Forum recently published a report mapping most initiatives that are underway. It also highlighted that some standards are not open source and require payment, such as in this case.