Description: Tokenized security refers to the representation of financial assets in the form of digital tokens on a blockchain. These tokens can represent stocks, bonds, real estate, or other types of assets, and their issuance and transfer are carried out through smart contracts. Tokenization allows for greater liquidity, as assets can be fractionalized and traded on digital markets, facilitating access to a broader base of investors. Additionally, tokenized securities are subject to specific regulations, ensuring compliance with financial norms and investor protection. This innovation in the financial sector aims to combine the transparency and immutability of blockchain technology with the regulatory framework of traditional markets, thus offering a modern and efficient alternative for asset investment and trading. Tokenized securities also promote financial inclusion, allowing individuals who previously could not access certain markets to participate in them through digital platforms.
History: Tokenized security began to gain attention around 2017, when the rise of initial coin offerings (ICOs) led to the exploration of tokenizing traditional assets. In 2018, the U.S. Securities and Exchange Commission (SEC) issued guidelines on classifying tokens as securities, which spurred the development of regulated tokenization platforms. Since then, several companies have started offering tokenization services, and the concept has evolved with the creation of standards like ERC-1400 on Ethereum, specifically designed for the issuance of tokenized securities.
Uses: Tokenized securities are primarily used in the investment and trading of financial assets. They allow investors to purchase fractions of assets, facilitating portfolio diversification. They are also used in fundraising through crowdfunding platforms, where investors can acquire tokens representing stakes in projects. Additionally, tokenized securities can streamline settlement and regulatory compliance, as transactions are transparently recorded on the blockchain.
Examples: An example of a tokenized security is the tZERO project, which allows the issuance and trading of tokenized securities on its platform. Another case is that of Harbor, which has worked on the tokenization of real estate, allowing investors to acquire stakes in properties through tokens. Additionally, the Securitize platform offers tokenization services for companies looking to issue digital securities in a regulated manner.
