As of January 24th 2019, Zilliqa and MaiCoin have announced plans to launch Hg Exchange, a soon-to-be security token platform in Singapore. While the platform already has a list of companies lined-up for business, the exchange has revealed early plans which involve the tokenization of existing shares to include Uber, Airbnb, and Space X.
How Hg Exchange Plans to Tokenize Existing Shares
The security token industry continues to gain traction in early 2019— both in the United States and beyond.
Blockchain-based startups Zilliqa and MaiCoin have partnered to create ‘Hg Exchange’- a security token exchange in the making.
Based in Singapore, Hg Exchange plans to establish itself as a one-stop-shop for the tokenization of traditional financial securities. Zilliqa is set to facilitate the process of tokenizing existing shares. MaiCoin— a Taiwan-based exchange platform for digital assets— plans to build the exchange functions, including its matching and order book. They are also set to provide multi-factor authentication and transaction signing verification.
In a recent statement, Hg Exchange said it plans to increase investor access to both early startups as well as established giants:
“It is envisaged that Hg Exchange will provide access to high-growth startups and also decacorns [companies valued above $10 billion] such as Uber, Airbnb, Space X, Grab and Didi Chuxing, which are currently not within reach of the average investor.”
Hg Exchange already has relationships in the making, having signed a memorandum of intent with four enterprises: Phillip Securities, PrimePartners, RHT Capital, and Fundnel.
The Hg Exchange and Security Token Regulations Explained
With security tokens come regulation. Since security tokens openly declare themselves securities, they are subject to the existing laws which protect investors through the regulation of fundraising, profit sharing, and general transfer of asset ownership.
Hg Exchange has applied to participate in the Monetary Authority of Singapore’s (MAS) FinTech Regulatory Sandbox. In addition, all financial intermediaries who utilize the exchange will need to be granted a license to conduct their respective activities by the MAS.
Furthermore, a spokesperson from Hg Exchange revealed that while minimum investment amounts are expected to be lower than current platforms, eligible investors will be restricted to institutional or accredited status at the time of launch.
The High Potential of Security Tokens in 2019 Explained
Hg Exchange isn’t the first to announce plans of tokenizing existing shares.
Earlier this month, DX.Exchange announced plans to tokenize shares of Facebook, Tesla, and Apple.
To date, the security industry has experienced a lot of progress in a relatively short amount of time. A number of critical developments in the security token space transpired in recent months. Security tokens feature significant benefits when compared to their traditional counterparts, as explained in our in-depth security token guide. Yet a common critique has consistently revolved around the lack of liquidity in the current stage of security tokens.
However, the most important step in expanding that liquidity has begun. Two SEC-regulated security token trading platforms are now live in the United States: OpenFinance Network (OFN) and tZERO.
Numerous assets have already been tokenized, including real estate, investment funds, equity, and fine art. In fact, even professional sports teams have expressed interest tokenizing fractional ownership with added benefits ‘re-bundled’ into ownership.
With the security token industry developing at a rapid pace, the lack of liquidity appears to have an increasingly shortened timeline.
What do you think about Hg Exchange planning to tokenize existing shares? Which will see more success initially: the tokenization of existing shares, or initial funding rounds for early startups in token form? Let us know what you think in the comments section below.
Image courtesy of CryptoNinjas.