As announced earlier this month, CEZEX— a Philippines-based licensed security token exchange owned by Inbase Partners— is set to offer security token trading services in Hong Kong during the first quarter of 2019. More recently, CEZEX director Carlos Salas described how Binance’s upcoming security token exchange in Malta holds no serious threat.
CEZEX Licensed to Provide Trading Services in Hong Kong
CEZEX, regulated and licensed by the Cagayan Economic Zone Authority (CEZA), is set to offer a compliant digital token trading service, according to director Carlos Salas.
Salas, who also serves as Managing Partner of Inbase Partners, an advisory firm for digital token issuance, provided the following comments.
“We have taken the existing financial system and digitalized it. CEZEX is not much different from a traditional exchange. But instead of trading securities, we trade asset-backed security tokens.”
CEZEX isn’t the only development in the security token sector. Numerous advancements in the fast-growing community indicate security tokens will be the next big wave in capital markets.
A security token differs from a utility token insofar as it is backed by a real-world asset. Salas claims that a security token exchange offers a much lower cost to transfer asset ownership when compared to traditional methods.
Through the use of smart contracts, many previously illiquid assets have drastically increased levels of liquidity through fractionalized ownership. Whereas a Hollywood film previously required $50 million up-front to fund, such a requirement can now be divided into much smaller investments in an efficient manner, through tokenization.
The same concept applies to real estate investing. Already, the world’s first real estate fund— featuring fractionalized ownership— has been built on Ethereum.
Not only does tokenization offer added liquidity, it lowers the requirements to invest by decreasing the initial investment amount, thereby increasing investor-access. Many predict that such benefits will result in tokenization as bridging the gap between traditional and cryptocurrency finance.
Such benefits are precisely what motivated Salas in developing the CEZEX exchange.
The Timeline and Future Services of CEZEX
At the start of 2019, CEZEX plans to offer three primary asset types for trade. They include: 1) derivatives, such as stocks, private equity, CFDs, and tokenized commodities, 2) currencies, both traditional fiat and various top 10 cryptocurrencies, and 3) security tokens, to include both primary Security Token Offerings and secondary market trading.
In Q2-Q3 of 2019, the exchange plans to extend their services to include the trading of physical commodities such as contracts linked to physical gold and silver.
Competition with Binance’s Developing Security Token Exchange in Malta
When questioned about any concerns regarding future competition with Binance, Salas responded:
“Binance has done a joint venture with the Malta stock exchange under EU regulations. Therefore, Binance has to comply with EU regulations.”
EU regulations indicate a lengthy process. Yet Salas went on to highlight how CEZEX has helped the Philippines’ regulatory body construct its regulations. The license acquired by CEZEX comes with no surprise then: it allows them to list any tokenized asset class.
It will likely take a considerable amount of time before Binance can say the same.
What do you think about Salas’ recent comments about his lack of concern for competition with Binance? How long will Binance require to satisfy EU regulations? Let us know what you think in the comments below.
Image courtesy of CEZEX.