London Stock Exchange Completes First Test of Security Token Issuance

The London Stock Exchange (LSE) has worked with Fintech company 20|30 to issue the first tokenized securities on the platform. Approximately £3 million worth of tokenized equity was issued and settled via Ethereum in a ‘test environment’.

20|30’s Security Token Issuance and the London Stock Exchange Explained

The £3 million worth of security tokens were issued and settled through LSE’s Turquoise equity trading service.

The activity marks the first-ever security token issuance which is regulated by the Financial Conduct Authority through the Sandbox 4 program.

Distributed Ledger Technology (DLT) allows for financial securities to skip many of the traditional steps in issuance, settlement, and transfer, saving both time and money. Through the various existing methods of automated trade verification for example, the need for clearing houses to process transactions is eliminated.

20|30’s tokens will be locked-up for a period totaling one year, and will be available to eligible banks, brokers, specialist trading firms— but not retail investors.

Tomer Sofinzon, CEO of 20|30, described the highly sought-after potential in the movement towards security tokens:

“Tokenisation will unlock value in a whole range of assets, from existing shares to new issuance, bonds, property, IP, fine art and much more.”

20|30, which is headquartered in London, now plans to develop its own product— TokenFactory— to allow other companies to issue their own equity-backed security tokens.

The Growing Implementation of Security Tokens Explained

Despite Bitcoin having launched more than 10 years ago, its underlying technology has yet to reach mainstream finance.

The primary reason for this is due to the regulatory ambiguity which has consistently clouded the digital asset space.

According to U.S. Securities and Exchange Commission (SEC) Chairman Jay Clayton however, the majority of DLT-powered digital assets are subject to existing securities laws.

The result of such guidance has been the emergence of security tokens: digital assets that comply with existing securities laws— depending on the applicable jurisdiction.

Already, equity, real estate, investment funds, and even fine art have experienced the benefits of tokenization, all in a regulatory compliant manner.

What do you think about 20|30’s collaboration with the London Stock Exchange? What does the future of security tokens look like with the LSE? We want to know what you think in the comments section below.

Image courtesy of the London Stock Exchange.