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ARTICLE · 31 OCTOBER 2018

Tokenizing Securities: Is It Worth It?

Of particular interest in corporate finance is the tokenization of securities, such as bonds, stocks, and derivatives.

CanadaCorporate/Commercial Law

Tokenization refers to the process of converting the right to an asset into a digital token, issued, stored, and transferred on a blockchain (the latter of which we've covered previously). Many real world assets can be tokenized, including fine art and real property.

Of particular interest in corporate finance is the tokenization of securities, such as bonds, stocks, and derivatives. A crucial feature of security tokens is that they would be issued in full compliance with securities laws and regulations, making them more appealing to institutional investors.

Lower costs, higher liquidity

Private securities are often significantly less liquid than public ones, given the restrictions on secondary trading of private securities, and the often required intermediaries (e.g. brokers). As such, there are numerous costs associated with facilitating such trades, and ensuring their compliance with the law. A significant percentage of such costs are often transferred to the

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