A Nasdaq-powered crypto startup plans to let its clients indirectly purchase shares of major firms through a token-based platform. Estonia-based DX.Exchange announced Thursday that it would launch its trading platform on Jan. 7, allowing its clients to purchase crypto tokens representing shares in different tech firms listed on the Nasdaq exchange. Customers will be able to use select cryptocurrencies, as well as fiat currencies to purchase the tokens. The company will use Nasdaq’s matching engine to facilitate the trading of digital securities, as well as protect against market manipulation. DX.Exchange customers will not be purchasing ownership of shares directly, but rather, will purchase tokens which represent shares in a company, COO Amedeo Moscato told CoinDesk. “Henceforth, when they become a token holder, they own stocks or portions of the company’s stock, as the tokens are backed 1:1 to the real-world stocks. That makes them entitled to the same cash dividends that the stocks are worth,” he explained. MPS Marketplace Securities, Ltd, which DX.Exchange has an agreement with, will purchase the real-world stocks based on customer demand, and generate ERC-20 tokens to represent each share. The actual shares themselves would be stored in a segregated account separate from any of MPS’ internal funds or usage. This is intended to act as a safeguard against the company having issues or filing for bankruptcy, he explained. Moreover, MPS will fall under the supervision of the Cyprus Securities and Exchange Commission, while DX.Exchange will abide by European Union regulations and authorities. At launch, MPS said it will purchase shares in AlphaBet, Apple, Amazon.com, Facebook, Microsoft Corporation, Tesla, Netflix, Baidu, Intel Corporation and Nvidia. In addition to the matching engine, the platform is using Nasdaq’s financial information exchange (FIX) protocol, which is a standard used by a number of options securities trading firms in the U.S. The protocol defines electronic message exchanges for two parties conducting securities transactions. DX.Exchange is also partnering with Bloomberg, with the platform powering Bloomberg’s crypto center in turn. In addition to its stock services, DX.Exchange will offer peer-to-peer crypto trading.
I am confused about these tokens. How do they relate to socks???? if anyone has knowledge, can you please explain.
Actually, they only relate to odd socks. The odd socks can only be bought in any quantity less than 100. Personally I have about 15 odd socks. I hope Bloomberg and DX.Exchange can help me find the missing odd socks because I don't know how which form to fill out to tell the IRS about them.
Ok, let's say you purchase 100 tokens of Tesla. You buy those tokens from the DX.Exchange and each of your tokens is actually backed by 1 share of Tesla, which the exchange has already purchased in advance and is holding as collateral for your purchase. So a token in this sense is not vaporware. It's actually backed by something, which is a share of ownership in a company. Now your main question might be, "If I wanted to own shares in Tesla, why wouldn't I just buy the shares using my existing broker?" Well, you would want to use your existing broker if you only have money in U.S. dollars to invest. But if you have any funds in Bitcoin or Ethereum, you can't just use that to purchase shares in listed companies from whatever brokerage you're using. So essentially you have cryptocurrency that you really can't doing anything with. What DX.Exchange is doing is allowing you to invest in listed companies by using your existing cryptocurrency through the purchase of a token.
Sounds like a CFD using crypto. Some serious concerns: Counterparty risk issues? Front-running orders? What conversion rates are used etc.
fungibility would've had some nice tax saving implications, but I'm fairly certain they closed that loophole. Estonia may be a different animal.
My dryer seems to regularly eat just one of a pair of socks, leaving me with a large number of odd socks. Will this help me?
Hi Baron, Thanks a lot for explaining. Make perfect sense now. However, looks very shady and especially the fact that exchange is in former soviet block country, does not help with credibility. Similar to USD Tethers, no one knows much much actual $ is in their coffers. Personally, would not touch it under any circumstances. Regards, redduke
Here's another explanation from the DX.Exchange website: "MPS MarketPlace Securities, Ltd, under the supervision of the Cyprus Regulator, CySEC, purchases real world stocks, in accordance to token demand in the DX.EXCHANGE platform. They generate smart contracts, ERC20 tokens created on Ethereum’s network to represent those stocks. The tokens offered for sale are be based on leading public company shares listed on the biggest exchanges like NASDAQ, NYSE, Hong Kong Exchange and Tokyo Stock Exchange. Each Dx.exchange customer, interested in Digital Stocks, is asked to go over an additional small approval form with Term & Conditions, MIFID 2 compliant, where he will need to approve to enter into an agreement with MPS for buy/sell of Digital Stocks. MPS MarketPlace Securities, Ltd is the trust holder of the stocks on behalf of the token holders. Since Digital Stocks are not like CFDs with leverage, there are no carrying costs for the token holders. Each token is backed 1:1 by one share of real stock. These shares are held in a segregated account."
I can't imagine they would be allowed to take U.S. customers under SEC rules, are they just banking on the supposed anonymity of cyber currency?