Today, for the first time, equity was sold in tokenised form on the UK stock market. £3m equity in financial technology company 20|30 was issued in “tokenised” form on the London Stock Exchange’s Turquoise equity trading service, using digital representations of shares that function in a similar way to cryptocurrency technology. The share issue is the first of its kind using blockchain technology that is regulated by the Financial Conduct Authority (FCA) through its Sandbox 4 programme, the regulator’s test bed for new financial products.
Luke Saunders, Head of Digital Advisory and CTO at leading blockchain advisory firm AmaZix, commented:
“It is very promising to see that blockchain-based shares for the Fintech company 20|30 have been accepted on the London Stock Exchange. While the tokenisation of assets is nothing new, it is significant that one of the financial sector’s most important players is now embracing blockchain technology. This mirrors actions from some of the biggest financial firms, such as JP Morgan, who have looked at blockchain technology and its potential with greater interest over the last year.
“The blockchain provides organisations with the ability for fast, decentralised transfers which are recorded in an immutable ledger. The transparency and security provided by this technology makes it an obvious choice for distributing shares and represents a viable evolution on modern trading.
“While this announcement breaks new ground for blockchain technology in a traditional financial institution, it is certainly not going to be the last time we see tokenised assets or shares on other regulated trading platforms.”
Matt Hawkins, CEO at Cudo Ventures, a company that is using blockchain to trade computing power, commented:
“By issuing shares on a blockchain ledger, 20|30 is using a cryptographic record of transactions rather than a centrally managed system. In financial markets, new SEC guidance will help Secure Token Offerings (STOs) bring liquidity to traditional markets whilst applying regulation to help protect investors from some of the risks posed by Initial Coin Offerings (ICOs). The FCA’s Sandbox 4 programme has helped to progress this.
“Blockchain is still a nascent technology, but it is wrong to dismiss it. The Cudo Ventures’ business model of collaborative consumption was not possible until cryptocurrency and blockchain – it facilitates frictionless global micropayments and trust respectively. For the same reason, large companies are quietly applying blockchain as a way to automate business processes between entities. Maersk is applying blockchain to international freight, and PayPal – often viewed as at risk from blockchain – has invested in a blockchain start-up to improve identity management.”