Exchanges
Extauri Set to Become Europe’s First Fully Compliant Digital Security Exchange
Press release
In recent news, Extauri has begun onboarding security tokens in anticipation of their upcoming platform launch. This process is open to companies that have already completed their own security token offering / digital security offering.
While there is often talk about the benefits of security tokens, and the new levels of liquidity they offer investors, this simply isn’t the case…yet. For the promise of increased liquidity and financial flexibility to be realized, we need to see the launch of secondary markets. We need to see exchanges that bridge the gap between crypto and traditional finance. Extauri aims to do just that.
About the platform
The exchange is expected to launch in Q2 of 2019. Although not all planned functions will be available at that time, core functions will be active.
The end goal is to have a comprehensive platform that appeals not only to investors, but potential token issuers as well. The exchange plans, in time, to play host for ICOs and STOs that wish to tokenize their companies.
Recognizing that the security of an investor’s funds is paramount, the exchange will be utilizing various methods to ensure this is achieved. The simplest and, arguably most important, step is in offering the My Admin Wallet (MAW). This will serve as a wallet for exchange users to hold their funds. What is important to note is that users will hold their own private keys. This means that not even Extauri can access funds within MAW (Extauri simply processes transactions). Simply put, if you don’t control the private keys to where you store your money, you are NOT in control of your money.
Keeping in line with the ideology behind digital securities, Extauri is a fully licensed exchange. Oversight will take place by both the FMA and BaFin.
Extauri
Extauri was founded in 2018, and is based out of Liechtenstein. With this exchange, they plan one being the first legally compliant digital securities exchange to launch within Europe.
Beyond the discussed exchange, Extauri has future plans of attaining a Multilateral Trading Facility licence (MTF). This means that they would become a self-regulated trading venue. In doing so, they would gain the ability to trade between various exchanges.
Upcoming STO of their own
Similar to competing platforms, Extauri plans on releasing their own token. This token will act as a utility token, and is based off of the ERC-20 protocol.
Known as TAURI, this token will provide users of the platform with various benefits
- 50% discount on transactions fees
- Discounts on ICOs and STOs hosted on the Extauri platform, if paid in TAURI tokens
Extauri is currently completing their private sale, with a public sale scheduled to launch in the coming weeks. When this occurs, we will provide more details and insight into the token sale.
Inevitable Delay
Dating back to 2015, the ASX has been developing a replacement for their ‘Clearing House Electronic Subregister System’, also known as ‘CHESS’. While they have a plan, and it is in motion, the popular exchange has suffered various setbacks along the way.
The latest of which is due to COVID-19. With so much market uncertainty, and workforce disruption arising from the pandemic, many of ASX’s partners are simply not ready. As such, in order to provide, both, themselves and their partners with ample time to ready their systems for the eventual upgrade, ASX has postponed the event.
In their public statement, ASX clearly listed COVID-19 as the reasoning behind this delay, by stating,
“ASX is replanning the CHESS replacement implementation timetable due to the uncertainty created by the unfolding COVID-19 pandemic”
This delay will see ASX reconvene in June, to discuss a new launch date for their replacement program. This launch will occur sometime after April of 2021.
In October of 2020, all users of the exchange are expected to be able to begin using the replacement system in a testing environment.
CHESS
Launched 25 years ago, CHESS is a computer system operated by ASX subsidiary, ASX Settlement. It marked the exchange’s first steps towards electronic shares vs. physical shares. ASX notes that they rely upon this system for two major functions.
- Clearing and settlement of trades
- Electronic registry of shares from listed companies
The system has worked well to date, and will continue to do so until it is replaced. The ASX has noted, however, that they are always looking to the future, and what can be done to streamline operations. The implementation of distributive ledger technology, as a replacement for CHESS, is one of these forward looking moves.
Anticipated Benefits of DLT
While CHESS may have marked a major step forward at the time of its implementation, the 25 year old system has obviously begun to show its age. While fully functional, it simply is not as cost effective, flexible, or quick as what new technologies can provide. The following are a few of the anticipated benefits of DLT, once implemented.
- Clearing Times
- Settlement Times
- Cost Savings
- Reduction in Parties Involved
Once implemented, the ASX will be primed and ready to support what many feel will be a major step forward – the hosting of digital securities.
Commentary
In addition to outlining the reasoning behind the delay of their replacement for CHESS, ASX Deputy CEO, Peter Hiom, took the time to comment. He stated,
“ASX remains fully committed to CHESS replacement. We continue to progress the project, including system development and testing, supporting back office software developers, and assisting users in their readiness activities. The investments we are making in the new system and in distributed ledger technology are for the long-term benefit of the financial services industry and the Australian economy.”
Australian Securities Exchange (ASX)
Founded in 1987, the ASX operates out of Sydney, Australia. Since their launch, the company has grown into one of the largest full service exchanges in the world. The company describes their full services as including listings, trading, clearing, settlement, tech & info services, and post-trade services.
Deputy CEO, Peter Hiom, currently oversees company operations.
In Other News
The effects of COVID-19 are already widespread across basically every industry. This includes tech, and the world of blockchain. We recently took a look at a few of the various ways the ongoing pandemic is changing the way many operate. Make sure to peruse the following article to learn more.
This week, one of the largest crypto exchanges in the world, Binance.US, added support for Tezos (XTZ). The addition places XTZ tokens within direct access to millions of traders in North America. As such, analysts predict the move will strengthen XTZ’s market price in the coming days.
News of the addition first came via a social media post from Binance. The post linked to a company blog in which the firm goes into more detail about the maneuver. According to company documents, XTZ trading pairs are active as of Monday, March 16th. Interestingly, the platform allowed investors to deposit Tezos starting the previous day.
Notably, Binance created numerous XTZ trading pairs. These pairs include one stablecoin, BUSD. Additionally, Binance added support for fiat pairs as well. However, the documentation does point out that users will need to complete both AML and KYC security protocols to participate in fiat trades.
Tezos Security Token Issuance
Tezos continues to gain ground across the security token sector. Importantly, the firm managed to secure a bevy of strong partnerships in the industry. For example, XTZ partnered with Latin America’s largest investment bank, Brazil’s Banco BTG Pactual S.A. back in 2019. The deal gave Tezos considerable pull in the region as it involved the tokenization of $1 billion in assets.
Tezos via Homepage
Since that time, Tezos continued to gain market positioning due to a combination of technology and networking skills. The company saw heavy media coverage earlier this year after the security token issuance platform Vertalo announced the platform would transition from ETH to XTZ. This decision echoed that of another major player in the field, the German-based issuance platform, Fundament, who also made the switch over to Tezos back in 2019.
One of the biggest partnerships Tezos was able to secure to date was with TokenSoft. TokenSoft is a leading security token issuance platform with a huge clientele base. The partnership significantly expanded Tezos’ market penetration as it was reported that $3 billion in security tokens were added to the company’s pipeline.
Why XTZ?
Tezos found a home in the security token sector for a number of key reasons. For one, the Ethereum blockchain has certain limitations imposed by its technical aspects. For example, ETH utilizes a Proof-of-Work consensus algorithm. This style of consensus is both expensive and slower than many other options now available in the market. Basically, ETH can handle only 15 transactions-per-second (TPS).
Additionally, ETH-based smart contracts are written in Solidity. Consequently, this programming language doesn’t allow for an easy formal verification process. Also, the decentralized and open nature of the Ethereum blockchain raises concerns about transactions receiving approval from unauthorized locations. Specifically, issuers shared concerns about individuals in sanctioned countries approving US securities transactions.
Tezos eliminates these concerns with a combination of helpful features. For example, Tezos can both create and verify smart contracts directly from the platform. Also, Tezos doesn’t need to perform hard forks to make major protocol upgrades to the system. This feature is important when you consider the shifting regulatory landscape currently in place. Notably, XTZ can create geo-locked regions to ensure no sanctioned regions participate in transactions.
Importantly, Tezos utilizes a Proof-of-Stake algorithm. This consensus mechanism is less costly compared to PoW and unlike other PoS protocols, any stakeholder can participate in the consensus process and be rewarded for contributing
Tezos Advance Security Token Blockchain
Today, XTZ is one of the key players in the STO sector. As more firms choose this protocol over ETH, more developers gain interest in the blockchain. As it stands now, Tezos is set to overtake ETH’s market dominance in the coming months.
Pilot Program
Another securities exchange, the Eastern Caribbean Securities Exchange (ECSE), has seen the merit behind digital securities, and signed a fresh letter of intent (LOI) with Blockstation.
This letter represents an upcoming pilot program, which will see Blockstation act as a service provider for the ECSE.
With Blockstation touting a comprehensive tokenization platform, this means offering a variety of capabilities. It is anticipated that these will allow for the ECSE to support the trading of various assets, such as BTC, ETH, and, of course, STOs.
Caribbean Presence
At this point, it would appear as though the Caribbean has spoken, and made their choice of service provider clear – Blockstation
Each of the following are examples of pilot programs involving Blockstation that have either been completed, are off the ground, or are about to launch.
- Jamaica Stock Exchange
- Barbados Stock Exchange
- Eastern Caribbean Securities Exchange
Features
With regards to the LOI, the ECSE has indicated that they intend to leverage the Blockstation platform, providing their clients with access, but not limited, to the following perks:
- asset insurance
- compliant KYC/AML measures
- SLAP (a Blockstation solution which provides companies looking to host an STO with a streamlined process for creating a prospectus)
Commentary
Upon announcing this newly signed partnership, representatives from each, Blockstation and ECSE, took the time to comment.
Trevor Blake, Managing Director at the ECSE, stated,
“The ECSE is proud to take a leading role in increasing access to and participation in our securities market through digital assets…This pilot follows the pilot being undertaken by the Eastern Caribbean Central Bank (ECCB) of a digital EC dollar (DXCD) that will be the world’s first central bank-backed digital currency, supporting the ECCB’s goal to remove financial frictions, promote financial stability, and expedite growth and development in the member countries of the Eastern Caribbean Currency Union (ECCU).”
Matt Singh, VP of Sales at Blockstation, stated,
“It’s inspiring to see the vision of shared prosperity resonate so strongly in our conversations with the ECSE and financial regulators in the region…We look forward to advancing the ECSE’s goals of leveraging the blockchain to bring transparency, improved security and new economic opportunities to their citizens and global investors.”
Speaking with Marko
In our ongoing interview series, we were fortunate to have recently interviewed the President and CEO of Blockstation, Marko Hafez. In this discussion, we learn more about what Blockstation has to offer, and how they found themselves helping exchanges like the JSE transform the way they operate.
Interview Series – Marko Hafez, President & CEO of Blockstation
Blockstation
Since being founded in 2015, Blockstation maintains headquarters in Toronto, Ontario, Canada. Blockstation looks to service and establish the digital securities sector, through their comprehensive tokenization platform.
CEO, Marko Hafez, currently oversees company operations.
Eastern Caribbean Securities Exchange
Acting as a subsidiary of the Eastern Caribbean Central Bank, the ECSE maintains operations in the island nation of St. Kitts.
CEO, Trevor Blake, currently oversees company operations.
In Other News
For those that may recognize the ECSE mother company, ECCB, it may be due to recent news of their decision to create a central bank digital currency. The ECCB fully intends to be first to market, globally, with their own digital variant of a central bank issued currency.
ECCB to Issue World’s First Blockchain-based Digital Currency