Today, for the first time, equity was sold in tokenised form using UK stock market technology and infrastructure. £3m equity in financial technology company 20|30 was issued in “tokenised” form and settled in a test environment 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.
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.”
Traders should not dismiss blockchain
Blockchain is still a nascent technology, but Hawkins says 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.
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For the same reason, large companies are quietly applying blockchain as a way to automate business processes between entities. For example, 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.
20|30 was founded by David Siegel and Tomer Sofinzon to develop solutions for the financial markets using blockchain technology.