Estonia-based Nasdaq-powered digital trading platform DX.Exchange is claiming an industry first with its launch of security token trading and security token offering (STO) listings. The development was shared with Cointelegraph in a press release on March 14.
As previously reported, DX.Exchange went live in January, with support for various fiat and cryptocurrency trading pairs and tokenized stocks. In March, the platform added tokenized exchange-traded funds (ETFs) to its supported products.
According to the press release, the platform now allows investors to purchase security tokens using both fiat and major cryptocurrencies such as Bitcoin, Ethereum (ETH), Tether (USDT) and Ripple (XRP). Following this latest development, DX Group will also reportedly restructure into a new entity called DXtech Exchange.
Security token trading represents the latest offering enabled by DXtech Exchange’s existing partnership agreement with Cyprus-regulated broker MPS MarketPlace Securities Ltd., which has thus far enabled the platform’s provision of tokenized stocks and ETFs.
Trading of security tokens will reportedly require investors to undergo an additional layer of Know Your Customer checks, in compliance with the European Union Markets in Financial Instruments Directive II.
MPS will be the entity that lists the tokens and acts as a counterparty in their trading. All trades will be automatically matched using matching engine technology and monitored by a surveillance system.
To demonstrate its new services, DXtech Exchange launch STO listing and trading for a security token dubbed IGWT, which will be offered in a time-limited private security token sale of 18 million IGWT. Thereafter, ten percent of the company’s profits will reportedly be regularly distributed to IGWT token holders that will own 100 percent of the tokens.
The press release outlines the eligibility requirements for listing a security token with DXtech Exchange, which include evaluation by the platform’s investment committee, the provision of a legal opinion, full background vetting, a review of the token’s blockchain protocol and providing DXtech exchange with data on to whom and how tokens are distributed.
The platform’s investment committee reportedly assesses security tokens issuers on the basis of their white paper’s transparency, fundraising method and team.
The press release states that the platform eventually aims to list various security tokens including company shares, company profit splits, funds, bonds, real estate and art.
As security tokens continue to gain industry traction, top crypto exchange Binance is also eyeing the sector, signing an MoU last fall with the Malta Stock Exchange’s fintech and digital asset subsidiary, MSX PLC to jointly launch a new security token digital exchange.