Exchanges and Secondary Markets for Security Token

Right now there is an unspoken race being waged over who will win the world’s demand for security token trading and it isn’t possible to decide yet on a winner in this race. Although some candidates enjoy an early lead, some others are moving forward fast with advantages that can make them into winners as well.

The five main candidates include(1):

Currently, cryptocurrency exchanges and startup security token exchanges are in the lead of this race; however, decentralized exchanges are gaining traction. The status quo banks and traditional licensed exchanges are slow to move. Each category may specialize in different segments as well. Banks for example may specialize in segregated markets for a specific company’s private equity that can only be traded by a whitelist of professional investors.

Security token issuers will be able to list their security on multiple trading venues in multiple jurisdictions, and traders will be able to arbitrage across trading venues. However, price gaps will still exist due to perceived risks associated with different venues and jurisdictions. For example, Blockchain Capital’s BCAP token has been trading significantly below its net asset value since inception.

BCAP’s Price on Secondary Markets Trades Below NAV

For some observers, trading securities tokens on centralized exchanges may seem contradictory, as decentralization is one of the key aspects of tokenization, but in practice these entities still lead. We will take a more comprehensive look at this matter in a practical report with Andy Flury from AlgoTrader next week.


This article is an extract from the 90+ page Security Token Report 2021 co-published by the Crypto Research Report and Cointelegraph Consulting, written by thirteen authors and supported by Crypto Finance, Blocklabs Capital Management, HyperTrader, Ten31 Bank, Stadler Völkel Attorneys at Law, Riddle&Code, Coinfinity, Bitpanda Pro, Tokeny Solutions, AlgoTrader, and Elevated Returns.