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Cryptocurrency exchanges begin offering tokenized securities

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Re: Cryptocurrency exchanges begin offering tokenized securities

#11

Post by lxgr »

NickNaraghi wrote: post #8
lxgr wrote: post #6

Approximately everybody in the US is able to get a brokerage account for trading public shares (with actual SIPC insurance, very limited liability for fraud etc). At the same time, the publicly investable stock market constitutes less and less to the total universe of US companies. Unless tokenized securities will somehow make private investments accessible to non-accredited investors, this initiative seems to be ent…

The main value proposition is faster settlement. The big institutions can measure their profits in terms of settlement time, going from 2 days to 1 day (previous infrastructure upgrades) to instantaneous (this) makes them more money.

I see how it can make sense on the settlement layer, but that's of absolutely no relevance to individual investors, which is who Robinhood are targeting.

In the EU, as far as I remember most modern brokers let you buy shares with unsettled proceeds of others without restrictions; in the US, getting a margin account takes no effort at all and bypasses the freeriding rules too.

Re: Cryptocurrency exchanges begin offering tokenized securities

#13

Post by seanhunter »

One thing to note for people who don't have a securities background is that exchanges have offered "depositary receipts" which is essentially the same thing for some time - the innovation here is making the depositary receipt into a crypto token. Depositary receipts are used typically to provide a secondary listing for a stock outside the country of its primary listing. So for example on Nasdaq I can trade a "Vodaphone depositary receipt", which will be denominated in USD but relate to 1 share of Vodaphone, which is listed in GBp in the UK. Somewhere in the pipeline a depositary institution has the actual shares and keeps track of who is the beneficial owner of each share for which a receipt has been issued.

This is an easy way for large companies to generate more liquidity (from foreign investors) and often has tax or other advantages for investors in that they don't need to report an FX pnl- they can just hold the stock in their main currency even though its primary listing is actually in a different currency.

These are usually called ADRs (American Depositary Receipts) and EDRs (European depositary receipts) based on whether the instrument is listed in the US or Europe. So the Vodaphone example above of a UK public company trading a depositary receipt on Nasdaq would be an ADR.

https://www.investopedia.com/terms/d/depositaryreceipt.asp

Re: Cryptocurrency exchanges begin offering tokenized securities

#15

Post by csdreamer7 »

lxgr wrote: post #6

Approximately everybody in the US is able to get a brokerage account for trading public shares (with actual SIPC insurance, very limited liability for fraud etc). At the same time, the publicly investable stock market constitutes less and less to the total universe of US companies. Unless tokenized securities will somehow make private investments accessible to non-accredited investors, this initiative seems to be ent…

If you can shift these tokens around like Bitcoin my first thought was tax or sanctions evasion. Buy some VOO tokens from a 3rd party since you know your corrupt government (and you made money from that corruption) will seize your bank account for any reason. You hold these tokens in a private wallet stored somewhere for a few decades as your escape plan.

There was an article on how cut-throat (pun intended) low the margins are for money laundering in the competition between businesses to get drug trafficked US dollars from Mexico to China.

Re: Cryptocurrency exchanges begin offering tokenized securities

#16

Post by FollowingTheDao »

"Advocates say tokenization is the next leap forward in crypto and can help break down walls that have advantaged the wealthy and make trading cheaper, more transparent and more accessible for everyday investors."

They LOVE playing this game. "We are doing this so you can now be the whale you always dreamed you would be!" But mean while they cut you to shreds with fees.

Re: Cryptocurrency exchanges begin offering tokenized securities

#19

Post by conception »

toenail wrote: post #17

Yeah.. as long as a judge can say that a security belongs to party X and not to the owner of tokens... tokenized securities are useless, they could just be a database record.

“They could just be a database record” is the response for pretty much all legal crypto uses.

Re: Cryptocurrency exchanges begin offering tokenized securities

#20

Post by lxgr »

csdreamer7 wrote: post #15
lxgr wrote: post #6

Approximately everybody in the US is able to get a brokerage account for trading public shares (with actual SIPC insurance, very limited liability for fraud etc). At the same time, the publicly investable stock market constitutes less and less to the total universe of US companies. Unless tokenized securities will somehow make private investments accessible to non-accredited investors, this initiative seems to be ent…

If you can shift these tokens around like Bitcoin my first thought was tax or sanctions evasion. Buy some VOO tokens from a 3rd party since you know your corrupt government (and you made money from that corruption) will seize your bank account for any reason. You hold these tokens in a private wallet stored somewhere for a few decades as your escape plan. There was an article on how cut-throat (pun intended) low the…

If you don't trust your own government, but the US government and financial institutions, couldn't you just open a US brokerage account?

And conversely, if the US government doesn't want you as a shareholder (and by extension US financial institutions can't serve you), good luck to anyone trying to (knowingly or negligently) redeem any VOO that you've touched.

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