Crypto exchange DX.Exchange to launch platform to trade tokens backed by real stocks

DX.Exchange, an Estonia-based cryptocurrency exchange founded last year, is going to launch a platform next week that will allow investors to trade crypto tokens that represent shares of major firms such as Apple, Facebook, and Tesla, Bloomberg reported.

The company is going to launch the platform on January 7. It will initially allow investors to trade, indirectly via digital tokens, in the shares of 10 Nasdaq-listed companies. DX.Exchange plans to expand to the New York Stock Exchange, Hong Kong Exchange, and Tokyo Stock Exchange.

In order to facilitate the trading of digital securities, the company is using Nasdaq’s matching engine, which will also help protect against market manipulation, CoinDesk reported.

Speaking with CoinDesk, COO Amedeo Moscato clarified that investors would not be purchasing the shares directly, but would rather purchase digital tokens representing shares in a company.

“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 added.

DX.Exchange has entered into an agreement with MPS Marketplace Securities, Ltd. At launch, MPS will buy shares of 10 major companies including AlphaBet, Apple, Amazon.com, Facebook, Microsoft Corporation, Tesla, Netflix, Baidu, Intel Corporation and Nvidia.

As to how the process works, it explains on its 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.”

“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.”