Digital securities promise more liquidity, lower transaction costs, increase transparency, and automate laborious processes. In addition, digital securities have the potential to open up new markets by combining the best of private and public markets. One of the most promising use cases is the issuance and trading of digital securities.

Discover what digital securities are and the benefits of tokenizing securities.

What are digital securities?

Digital securities, also known as tokenized securities or security tokens, are financial asset classes like equities and bonds, where the ownership is digitally recorded on an immutable distributed ledger. Digital securities represent the stock or debts of corporations and are subject to customary securities laws.

Security Token Offering (STO)

In simplified terms, a Security Token Offering (STO) is a tokenized IPO linked to underlying assets like stocks, bonds, real estate, commodities, or funds. Depending on the tokenized security asset, investors have financial rights such as ownership, dividends, bonus, profit sharing, and buy-back options. As a result, security tokens offer more efficiency and an increased value chain than their paper equivalent.

Benefits of Digital Securities:

  • 24/7/365 trading
  • Faster settlement times
  • Increased liquidity
  • More transparency
  • Lower transaction costs
  • Fractionalized ownership
  • Contract automation
  • Advanced security

Digital securities exist as tokens on a distributed ledger and do not require intermediaries. Therefore trades can be settled 24/7 in near real-time. Furthermore, by improving accessibility and the possibility of trading the asset on a secondary market, more and different types of investors can invest in securities that before could not enter the market.

Digital securities also enable fractional ownership of assets, further lowering the entry barrier for investors and creating liquidity in less liquid markets like private equity and real estate.

Because of the distributed nature of a DLT, no single party can alter the data, creating a secure single version of the truth, which all participants can access and rely on, including advisers, auditors, and regulators.

Digital securities automatically record administrative tasks of purchasing and selling securities, including corporate actions like the payout of dividends. As a result, digital securities have lower operational costs.

The lifecycle of Algorand-based tokenized bonds

Asset tokenization

Our comprehensive asset tokenization solution enables you to open the security market to a broader audience, providing greater liquidity. At the same time, your investors can diversify their portfolio of assets at lower costs.

Get in touch to discuss how we can help you

Henri de Jong

Chief Business Development Officer

Quantoz N.V.
Europalaan 100
3526 KS Utrecht
The Netherlands

Registration number: 86401386

    Published On: October 17th, 2022 / Categories: Publications /


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