Originally posted by FinanceFeeds on Mar 31, 2023.
Archax, the FCA-regulated digital asset exchange, broker and custodian, has launched its tokenisation engine to enable the creation of tokens backed by any regulated or unregulated real-world or traditional asset.
Powered by blockchain technology, the tokenization engine allows Archax to roll out token representations of existing assets, starting with blue-chip UK traditional equities and funds to trade alongside new cryptoassets.
“Legal standing of tokens in UK securities law confirmed”
Graham Rodford, CEO and co-founder of Archax, commented: “The recent LawtechUK paper provided the last piece of the puzzle, confirming the legal standing of tokens in UK securities law. As the UK’s first FCA regulated digital securities exchange, we are now building on this to pave the way to make traditional assets interoperate with Web 3.0.
“Whilst others have announced similar initiatives in the past, we believe that this is the first time a regulated custodian holds the underlying asset in trust and then issues regulated tokens representing those assets that can be traded within the same ecosystem. All of these tokens are permissioned only to those that have been through our KYC/AML process, and in this way, we can add comfort to institutional players that they are always interacting with known participants.”
The Archax institutional, digital asset ecosystem facilitates fundraising, tokenization, custody, junior market, and full-blown exchange. It also covers a broad range of assets, from cryptocurrencies to tokenised assets to digital securities to NFTs.
Archax to issue tokens backed by equities, treasuries, carbon credits, funds, and cryptos
Archax believes that there is now a real focus from institutions on combining what has been pioneered in the digital asset space with traditional asset classes to enable them to be traded as natively digital-based instruments.
The company has recently rolled out its regulated digital asset custodian and its primary raise platform. Now, it is creating tokens backed by top listed traditional equities which they plan to trade on their exchange.
After tokenizing traditional equities, Archax plans to issue tokens of treasury instruments, carbon credits, and a number of tokenised fund projects, as well as other innovative cryptoasset instruments resulting in a multi-asset venue.
24×7 trading, streamlined corporate actions, and new forms of DeFi collateral
Benefits and efficiencies of tokenization on Archax include 24×7 trading, streamlined corporate actions as well as the potential for new forms of DeFi collateral.
Archax added that tokenizing assets like funds can open up new potential investor bases and create secondary markets for trading outside of redemption cycles.
These traditional asset-backed tokens also provide interesting new exposure for firms already operating in the crypto space, offering access to less volatile instruments within those digital rails, as well as leveraging cross-collateralization opportunities in the Web 3.0 DeFi space – such as borrowing and lending.