How to launch a Tokenized Stock Exchange
The latest digital asset now is tokenized stock. A tokenized stock is a digital asset traded on exchanges using blockchain technology. You can buy and sell them from pretty much anywhere in the world — just like you would any cryptocurrency.
What is Tokenized Stock?
Some companies issue tokenized stocks as a form of equity to help raise capital. Tokenization works by taking assets and converting the rights of those assets into a digital token. They are basically the same as regular stocks, but in this case, they operate within a crypto ecosystem.
These tokenized stock versions have the following advantages:
· Instead of buying an entire stock, you can buy only one piece of it
· Buying and selling is easier and cheaper than the real stocks
· More liquidity
· You can trade Tokenized Stocks 24/7
The value of tokenized stocks is based on and collateralized with the underlying asset, traditional security (usually publicly traded equity), and the value of the digital asset is determined by the value of the traditional security. This allows the tokenized stocks to reflect the economic performance of the applicable reference traditional securities.
How Tokenized Stocks Work?
Now you can trade tokenized versions of stocks like Amazon, Tesla, Airbnb, or Apple. And best of all, you can buy them with US dollars, Bitcoin or Tether. You can buy and sell them from anywhere in the world — just like you would any cryptocurrency. Tokenized stocks connect traditional stock markets with the crypto markets.
You can trade tokenized stocks in one of the exchanges. Each exchange has a slightly different process. You can visit their websites and find out instructions step-by-step on the tokenized page.
Is Tokenized stock regulated?
Securities laws are usually technologically agnostic, which means that security tokens, depending on their exact features, can be covered by the full scope of the relevant laws, which can vary considerably across jurisdictions. This applies not only to the creation and initial sale of tokens but also to trading in secondary markets. Therefore, many of the benefits of tokenization are compromised if laws prevent the free and international exchange of tokens.
Digital assets that are considered securities fall under the purview of the SEC. In fact, there seems to be some disagreement between the exchanges and the regulating agencies themselves.
What is Mirror Protocol?
According to their website, “Mirror Protocol allows the creation of fungible assets, “synthetics”, that track the price of real-world assets. Mirror synthetics are intended to be used as key building blocks in smart contracts, and to bring the world’s assets to the blockchain.”
Mirror Protocol receives price data on the assets its tokens represent via decentralized oracles that update every 30 seconds. The way they are designed, any mAsset created is meant to mirror the price behavior of the underlying represented real-world asset.
In this way, anyone in the world could, for example, trade in synthetic mirrored shares of Tesla 24/7 from anywhere in the world, and the price would be exactly the same as the price of the actual Tesla stock. All the trading is secured by the blockchain in a permissionless system.
How to launch a Tokenized Stock Exchange?
The tokenization platform. It connects authorized investors with trusted companies. A Tokenization platform provides the following benefits:
- Compliance with legal regulations
- Programmable securities
- Elevated liquidity
- 24/7 market availability
- Fractionalization of property
- No intermediaries
Opening a tokenized stock exchange involves not only a lot of capital but also requires specialized knowledge. So, it is strongly recommended that you get in touch with experts like Empire Global right from the beginning. If you have already started on the path to opening an exchange, it is not too late, you can still get in touch with the experts at Empire Global — they will jump right in and help you resolve any hurdles which you might be facing.
The Mirror Protocol platform was launched by Terraform Labs and runs on the Terra Network. Terra Network is a smart contract-based blockchain platform. Terraform Labs is a company based in South Korea that was founded in January 2018.
A Tokenization platform must include a well-oiled system of software modules:
- Role management (users and system administrators)
- Token lifecycle management (issue, withdrawal from circulation, etc.)
- Security management
- Integration with KYC/AML systems
- Integration with payment systems
- Management of commissions, limits, events
- Mobile and web applications
- Exchange module or modules for integration with external exchanges
Based on your business plans you may need different licenses for your exchange. The different licenses relate to the facility to have a wallet for your exchange, or the ability to provide escrow transactions for your customers. It is also essential that you have a clear business plan because that will determine the need for licensing based on specific jurisdiction.
As you can see this is just a preliminary action plan with which you can move forward. Although, building one’s own tokenized exchange requires a lot of work and effort, but it can prove to be a massive business when established and launched properly.