In the United Kingdom (UK), exciting advances for the blockchain industry are about to take place. It is one of the first demonstrations in a live deal that equity in a UK company can be tokenized and issued within a compliant custody, clearing and settlement system.
FCA regulatory sandbox
This is a result of the UK’s open-minded Financial Conduct Authority’s (FCA) regulatory sandbox. It recently entered its fourth round and out of the 29 firms being released by the financial watchdog last week, ten were blockchain related. Two projects stood out so much that they are now in collaboration with the London Stock Exchange Group (LSEG) and the FCA.
One of these promising startups, 20|30, will be the first company to test a primary issuance of tokenized stock in September. According to 20|30, once the first phase of testing has been completed, there are plenty of other companies in industries such as pharmaceuticals, software and agriculture seeking to test the model.
Testing the tech
The test will be conducted using a distributed ledger technology (DLT) platform developed by fintech company Nivaura which is integrated with the LSEG Turquoise platform. Nivaura most notably executed the world’s first fully automated cryptocurrency bond issuance in 2017.
In simple terms, the investment platform proposed by 20|30 is to be an easy, safe, and transparent process for approved investors to purchase equity tokens. The test on the LSEG’s Turquoise platform will allow for investors to place orders for equity tokens and matched orders will be cleared and settled on the blockchain.
The equity tokens that are to be issued are ERC20 tokens, meaning they are built on Ethereum. The trading of these tokens will occur presumably on an over-the-counter (OTC) basis once the one-year-long lock-in period has passed.
In a report made by CoinDesk, 20|30 co-founder Tomer Sofinzon said: “That’s absolutely possible… After the lock-in period, we can begin the next phase, to really test the tradability.”
A world of tokenized assets
Dr Avta Sehra, CEO and chief product architect at Navaura, also made some rather bullish comments to CoinDesk regarding the future of the industry.
Dr Sehra said, “The industry is going to become a world of tokenized assets – that’s inevitable. We don’t really care if its Ethereum or Bitcoin, the underlying infrastructure isn’t that important. But it is going to be a blockchain.”
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