Tokens for Tesla: Exchange launching next week will trade US shares in crypto

Exchanges • January 3, 2019, 8:06AM EST
UPDATED: January 3, 2019, 10:46PM EST
The Block

DX.Exchange, a European-regulated crypto exchange, plans to open its doors to investors next Monday, but it won't just offer trading between crypto and fiat.

The 100-person firm will also allow users to buy tokenized shares in Apple, Amazon, Facebook, Netflix, Tesla, and a number of technology companies that trade on the Nasdaq Stock Market. "We are launching with 10 of the top stocks traded on Nasdaq first. And we will again be adding more and more as we move forward," chief executive officer Daniel Skowronski said in an interview with The Block. 

Traders will be able to purchase tokenized shares in fiat or in select cryptocurrencies. An agreement with MPS MarketPlace Securities means they will back each tokenized stock purchase with an actual share of a given company, Skowronski said, adding the digitized stock will be ERC-20 tokens.

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The market for cryptocurrency exchanges is crowded, but DX.Exchange hopes that offering tokenized US stocks will help it stand out. Benefits to investors include the ability to trade US shares 24/7, outside the country, and to purchase a fraction of a share, COO Amedeo Moscato said. It could also improve the liquidity of selected companies. Still, the likes of Chris Concannon, the president of Cboe Global Markets, are unconvinced of the benefits of trading stock on a blockchain, saying recently at an industry conference he didn’t foresee it “impacting the most liquid assets that we trade.” 

DX.Exchange will leverage Nasdaq's SMARTS technology to monitor nefarious trading activity, including spoofing and market manipulation. "We built it on the back of Nasdaq's SMARTS and its matching engine technology. We follow MIFID compliance. Our license in Estonia allows clients to exchange fiat to crypto and crypto to crypto. And we have a full-scale institutional custody solution," Skowronski said of the platform. The firm will also support trading of 40 crypto trading pairs. 

The services will not be offered in the US until Q2 or Q3 of 2019, Moscato said.

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Frank Chaparro is Host of The Scoop podcast and Director of Special Projects. He also writes a biweekly newsletter. Chaparro started his career at Business Insider, where he specialized in the intersection of digital assets and Wall Street, market structure, and financial technology. Soon after joining Business Insider out of Fordham University, Chaparro was interviewing top finance and tech executives, including billionaire Mark Cuban, “Flash Boys” star Brad Katsuyama, Cboe Global Markets CEO Ed Tilly, and New York Stock Exchange President Tom Farley. In 2018, he become a sought after reporter in the crypto world, interviewing luminaries such as Tyler Winklevoss, the cofounder of Gemini, Jeremy Allaire, the CEO of Circle, and Fundstrat head Tom Lee. For inquiries or tips, email [email protected].

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