Tokenized Equities represent traditional company shares or ownership stakes that have been digitized and recorded on a blockchain as security tokens. Their purpose is to enable fractional ownership, increase liquidity, and facilitate more efficient transfer of equity interests through the inherent benefits of blockchain technology, potentially transforming traditional capital markets.
Mechanism
The mechanism involves issuing security tokens that digitally represent an underlying equity asset, adhering to regulatory compliance frameworks for securities offerings. These tokens are created on a blockchain, such as Ethereum, and are subject to programmable rules embedded in smart contracts governing ownership transfer, dividend distribution, and voting rights. This provides an immutable and transparent record of ownership, while also automating corporate actions.
Methodology
The strategic methodology behind tokenized equities focuses on leveraging blockchain for enhanced efficiency in issuance, trading, and post-trade settlement, reducing intermediaries and operational costs. It aims to expand investor access to private market investments and increase the liquidity of illiquid assets. This framework requires careful consideration of legal and regulatory compliance, ensuring that digital representation aligns with existing securities laws and investor protection mandates.
Ondo Finance now offers tokenized US stocks on Ethereum for non-US investors, integrating traditional markets with DeFi to enhance global liquidity and access.
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