First Digital Trust, a Hong Kong-regulated trust and custodian specializing in digital assets, has become the first official custodian of IX Swap, a security token and cryptocurrency exchange, according to a company announcement today.
Fast facts
- IX Swap is a decentralized finance (DeFi) automated market maker and liquidity pool for security tokens and tokenized stocks. The IX Swap platform facilitates the trading of security tokens through licensed custodians and security brokers.
- The partnership — one of the first moves to institutionalize the safekeeping, recording and custody of tokenized stocks and security tokens on DeFi platforms — will see First Digital Trust providing asset servicing, tracking, settling and reconciling asset transactions, the announcement said. “This collaboration will allow for the proper safekeeping, proper recording and custodying of assets with secure, accessible and integrated financial services, while bridging the gap between DeFi and CeFi to bring liquidity into the STO market and provide access to this untapped asset class,” said S. Alice Chen, co-founder and general counsel of IX Swap, in a statement.
- Tokenization and tokenized assets have emerged as trends this year. The power of tokenization can fundamentally transform the fabric of the financial system, said Singapore’s DBS Bank CEO Piyush Gupta earlier this year. In June, DBS issued its first security token offering — a S$15 million (US$11 million) digital bond — on the DBS digital exchange.
- A security token is a digital asset representing legal ownership of an asset such as equity, real estate or bonds. A stock token is a digital representation of equities pegged to the value of the relevant stock. Tokenized stocks have attracted interest from investors and cryptocurrency exchanges alike as they allow for fractional stock ownership and can be traded 24/7, with trades settled instantly. Cryptocurrency exchange Binance, which offered tokenized stocks of companies such as Tesla and Coinbase, wound down support for stock tokens on Binance.com earlier this year after drawing regulators’ ire from the UK to Germany to Hong Kong over whether they violated securities laws.
- “DeFi is witnessing immense growth in Asia, but because it’s a nascent space, it requires more regulated and compliant solutions for it to become more widely, and confidently, adopted,” said Gunnar Jaerv, COO of First Digital Trust, in a statement. “We are looking forward to helping IX Swap ensure investors can confidently trade security tokens and bring greater liquidity into tokenized stock ecosystems.”