As of March 25th 2019, eToro has acquired smart contract startup Firmo with the intent of strengthening its tokenized assets offering. The leadership behind eToro believes ‘all investible assets will be tokenized’ in due time, and wants to make its platform reflect such a vision.
eToro’s Acquisition of Firmo Explained
eToro— a social investing platform founded in 2007 with a vision of increasing investor access to global markets— has officially acquired Firmo for an undisclosed amount.
Firmo is startup specializing in facilitating smart contracts that enable derivatives to be tokenized on “any major blockchain”.
According to eToro co-founder and CEO Yoni Assia,
“The acquisition of Firmo will enable eToro to accelerate the growth of our tokenized assets offering. Blockchain and the tokenization of assets will play a major role in the future of finance. We believe that in time all investible assets will be tokenized and that we will see the greatest transfer of wealth ever onto the blockchain.”
The acquisition is in line with eToro’s strategic plan to maintain its position as a fintech frontrunner:
“While our expansion has been largely organic to date, as the eToro business continues to grow we are on the lookout to acquire businesses which will help us stay at the forefront of fintech innovation. We believe that the market is particularly exciting at the moment.”
How All Assets on eToro will Become Tokenized
Under the terms of agreement, Firmo will serve as an “internal innovation unit” with the purpose of “tokenizing all assets on eToro”.
The Firmo team has created a platform which allows for the secure deployment of financial contracts on different blockchains.
They have established this ability through the development of their own “formally verified, domain-specific” contract language called ‘FirmoLang’. The language can be translated onto numerous blockchain platforms such as Ethereum, EOS, or NEO, with the support of Firmo’s compiler.
According to Dr. Omri Ross, founder and CEO of Firmo,
“The advent of crypto and the blockchain technology that underpins it has driven an explosion in financial innovation, however, a number of challenges are preventing mass adoption and integration into legacy infrastructure. Our goal is to enable our users to trade any asset globally with instant settlement by tokenizing assets and executing all essential trade processes on the blockchain.”
The announcement comes after eToro’s recent launch of a cryptocurrency trading platform. As of March 7th 2019, the platform allowed for US customers in more than 30 states and territories to trade 13 cryptocurrencies.
One emerging asset experiencing tokenization is traditional financial securities. With regulatory ambiguity clouding the Initial Coin Offering (ICO) space, many enterprises have turn to the Security Token Offering (STO) to compliantly raise capital.
Equity, investment funds, real estate, REITs, and even fine art have all become tokenized. The tokenization of securities is anticipated to bring significant innovation and liquidity to many traditionally illiquid asset classes.
What do you think of eToro’s acquisition of Firmo? How long will it take for all assets to become tokenized on eToro? Let us know what you think in the comments section below.
Image courtesy of eToro.