The move comes after Securitize’s entry into the Spanish General Secretariat of the Treasury and International Finance’s sandbox for digital asset securities.
United States-based tokenization firm and trading platform Securitize is expanding to the European Union with the tokenization of Spanish real estate investment trust Mancipi Partners’ equity. According to the Thursday announcement, the firm is now the first to issue and trade tokenized securities in both the US and EU. Securitize is responsible for investor onboarding, share issuance, and capitalization table management.
The shares are tokenized on the Avalanche blockchain, with secondary trading expected to being in September. Tokenization is the process of turning traditional financial assets into digital tokens issued on a blockchain. The process has been lauded for its potential to reduce costs and improve efficiency. BlackRock CEO Larry Fink believes that “the next generation for markets, the next generation for securities, will be tokenization of securities.”
The move to issue tokenized real estate securities comes after Securitize’s entry into the Spanish General Secretariat of the Treasury and International Finance’s sandbox for digital asset securities. The firm is expected to operate under the EU’s Distributed Ledger Technology Pilot Regime set up in March by the European Commission and overseen by the European Securities Market Authority (ESMA). The goal of the pilot is to foster the trading of securities using blockchain technology in a regulated environment.
In the United States, Securitize is registered with the Securities and Exchange Commission (SEC) as a stock transfer agent and alternative trading system. It is also a part of the Financial Industry Regulatory Authority (FINRA).
Commenting on the firm’s participation in the sandbox, Securitize Europe Brokerage and Markets CEO Amparo Garcia Flores stated:
“This is not just theoretical work; we are proving that what we have in the USA is feasible in Europe. This means we can open our market to both sides of the Atlantic, effectively doubling the size of our business and the opportunities for issuers in Europe who previously did not have the same opportunities as their American counterparts.”
Flores also went on to highlight some advantages of tokenized over conventional capital markets, including the continuous full traceability of securities, reduced costs due to cutting out intermediaries, and direct market access for retail investors. Tokenization also improves liquidity by making the tokenized assets tradable on secondary markets in addition to benefiting businesses, a point raised by Securitize CEO Carlos Domingo.
“European businesses will be a major beneficiary of this innovation, giving businesses a new way to raise capital through primary capital raises, and obtain potential tax benefits and liquidity through secondary trading,” Domingo said.
Bank of America predicts that tokenization could upend the current financial infrastructure and usher in a more efficient system. A Boston Consulting Group report projects that the tokenized assets market will grow to $16 trillion by 2030.