Investing in digital assets – including funds - through tokenisation took a step forward after London-based Archax became the first digital securities exchange and custodian in the UK to be regulated by the Financial Conduct Authority (FCA).
Archax said its regulatory approval is a milestone for the emerging global digital securities ecosystem because it means that digital issuances from across the world will be able to trade on an FCA-authorised secondary market for the first time.
Digital securities take real-world assets, such as equity, debt or funds, and tokenise them using blockchain technology.
According to Archax, this not only modernises and simplifies the capital-raising process via disintermediation and the removal of market friction, but also helps facilitate liquidity in assets that are currently hard to trade.
The firm’s chief executive Graham Rodford said: “Digitally native assets are not just about new financial instruments. They will also revolutionise all existing traditional financial markets in time too. They bring huge efficiencies from activities happening ‘on chain’, which will particularly benefit the post-trade space.”
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