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Securitize to Tokenize Real Estate Trust in Compliance with EU's DLT Pilot

Tim Fries

Published: July 27, 2023 10:12 pm

Digital asset securities firm Securitize issued the first tokenized securities under European Union’s (EU) Distributed Ledger Technology (DLT) pilot regime on Thursday. The tokens are issued on the Avalanche blockchain, with secondary trading of these equities expected to start in September.

Securitize’s Tokenized Equites to Begin Trading in September

Digital asset tokenization platform Securitize has issued tokenized equities in Mancipi Partners, a Spanish real estate investment trust. The action comes after Securitize successfully entered the Spanish General Secretariat of the Treasury and International Finance’s test environment.

According to the announcement, the tokenized equities were issued using the smart contract network Avalanche under the supervision of Spain’s securities regulator. Trading of equity tokens on secondary markets is expected to begin in September, Securitize said.

“This is a pivotal moment for us because we have been working tirelessly to obtain the same kind of licenses in Europe that we have in the USA.”

– Amparo Garcia Flores, CEO of Securitize Europe Brokerage and Markets.

Still, the firm must pass a 6-month sandbox period under National Securities Market Commission (CNMV), Spain’s securities watchdog. Furthermore, the asset tokenization firm will also be required to obtain regulatory approval under the pilot regime, allowing it to issue, manage, and trade tokenized securities in the country and EU member countries.

The company is registered with the US Securities and Exchange Commission (SEC) as a stock transfer agent, broker-dealer, and alternative trading system. This represents Securitize’s first attempt to foray into Europe and offer tokenization services under the EU’s DLT pilot regime.

Asset Tokenization Market Growth

Securitization’s attempts to issue and trade tokenized assets in the EU highlight the growing demand for these blockchain-powered financial assets and their vast benefits. In simple terms, tokenization refers to turning traditional financial assets like bonds and stocks and issuing them on a blockchain network.

The popularity of asset tokenization stems from several factors. Firstly, it allows fractional ownership, enabling retail investors to access high-value assets previously out of reach due to their high costs. Secondly, it enhances liquidity, as tokens can be traded 24/7, eliminating the need for lengthy settlement periods.

Overall, tokenization democratizes access to complex and private equity for retail investors while increasing transparency and reducing the number of intermediaries. According to Emergen Research, the tokenization market size hit $2.28 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 19% between 2022 and 2030, potentially reaching $11 billion at the end of the forecast period.

This article originally appeared on The Tokenist