Yesterday Euronext, the world’s sixth-largest stock exchange by market capitalization, announced it invested €5 million ($5.65m) for a 23.5% stake in Tokeny Solutions. The startup is a Luxemburg-based finTech which offers institutions and issuers the ability to tokenize assets, equity and investment funds and issue the tokens on public Ethereum.
Tokenization can cut costs by bypassing intermediaries and automating processes. Potentially it can improve liquidity by enabling fractional ownership and trading is around-the-clock. Plus it increases transparency by providing audit trails for securities transactions.
Tokeny’s solution manages the issuance of tokens, transfers on the blockchain, as well as servicing such as dividends. Its T-Rex product ensures all tokens meet compliance requirements and hence are referred to as permissioned tokens. The tokens adhere to the Ethereum ERC-20 standard. However, the transfer of tokens from a seller to buyer is conditional on compliance. Additionally, the transfer has to be in accordance with any governance criteria specific to the token. But the tokens themselves are on the public Ethereum blockchain.
Like several other incumbent exchanges, Euronext is piecing together a digital asset offering. It already has a stake in LiquidShare which is also backed by Societe Generale, BNP Paribas, Euroclear and others. But where LiquidShare is a private permissioned blockchain focused on the post-trade settlement of sales, Tokeny deals with the tokens and the trades to be executed on a public blockchain.
Earlier this year, Deutsche Börse and Swisscom agreed to launch a digital asset exchange. Their collaboration also involved piecing together several startups. Additionally, SIX Digital is planning to launch a blockchain-based token exchange this year with the post-trade settlement based on R3’s Corda. Meanwhile, the Intercontinental Exchange’s Bakkt has raised $182.5m towards its own digital asset exchange. And Börse Stuttgart, Axel Springer and investment website finanzen.net plan to launch a blockchain-based trading platform this summer.
While the ASX was the first incumbent exchange to adopt blockchain, it is purely looking at it for post-trade to replace its existing CHESS settlement system.