The best exchanges to trade security tokens (digital stocks)

In the past year, security tokens have been announced as one of the next players in the world of digital currencies, and it is claimed that they will revolutionize the traditional form of securities issuance and investment. The first exchanges started listing security tokens in January 2019, and now more platforms support the possibility of issuing and trading equity tokens. In this article, we discuss the importance of security tokens and the progress of platforms created in this field.

What is a security token or digital stock?

First, let’s start with a simple explanation of what a security token is. The security token is issued under the title of Security Token Initial Offering (STO) and is equipped with equity-related features. Through these tokens, real-world assets can be converted into digital tokens. Therefore, tradable assets such as stocks, bonds, or other financial instruments can be converted into digital assets through blockchain technology. These security tokens can be distinguished from utility tokens or tools that provide their holders with access to services and products. Utility tokens do not have the promise of financial rewards because they have no regulations. In contrast, security tokens are backed by an asset. Therefore, their owners can directly participate in the financial development of the company’s value and even enjoy ownership rights. If the issuer of these tokens wants to provide an opportunity to participate in the development of the company and promise the token holder regular cryptocurrency interest payments (such as the dividend payment of a security), these tokens are issued as equity tokens. Hence, the innovation of security tokens is a way to handle financial claims on the blockchain. Importantly, security tokens are expected to challenge traditional securities trading, while STOs are said to have the potential to threaten traditional IPOs.

Best Platforms for Equity Token Trading

Most equity tokens are attractive to institutional investors and retail investors. Today, these tokens are traded on special digital stock trading platforms, known as Exchange Token Security. As of 2022, North American investors have access to four major security token exchanges in the United States. In the following, we introduce the most important platforms for the exchange of these tokens.

SDX: The Swiss stock exchange organization called Six Swiss has launched a digital currency trading platform called Swiss Digital Exchange (SDX), which is a leading platform for exchanging digital currencies and security tokens. This exchange has received the license of the Swiss Financial Markets Supervision Organization to issue, trade, and settle securities in Euro, and under the rules of the Swiss Central Bank, they can support Eurobond transactions. 

INX: A security token trading platform owned by the Gibraltar-based INX Group, available to accredited global investors. There are currently five other tokens available on INX apart from its native security token which trades under the name INX.

ADDX: This is a private exchange based in Singapore that changed its name from ISTOX to ADDX in 2021. The platform gives investors access to dozens of new and growing security tokens, from digital asset funds to private equity funds, corporate stocks, and more.

Nxchange: is a digital equity trading platform based in the Netherlands with a focus on asset portfolio diversification. The platform offers investors the freedom to choose securities based on different “field” such as emerging technologies, impact investing, and real estate. From 2022, this platform offers its users four investment options.

Mazdax: Mazdax exchange can be introduced as the first Iranian crypto-to-crypto exchange that has completely based its transaction process on digital currencies and also supports security token transactions. Mazdax updates its price list and charts by using real-time information from reliable foreign exchanges. This has caused this exchange, unlike other Iranian exchanges, to offer prices much closer to foreign exchanges. Currently, Mazdax supports 17 exchange-traded funds (ETFs), which are:

• Kian Eqw Index ETF
• Afra Namad ETF
• SaharKhiz ETF
• Charisma Ahromi ETF
• Kian Gold ETF
• Lotus Gold Com.ETF
• AGAH ETF
• Tameshk ETF
• ArmanAti Kosar ETF
• Kahroba Gold ETF
• Tavan ETF
• Kara ETF
• Palayeshi ETF
• Firooze ETF
• Zarin Sana ETF
• Andishe Varzan ETF
• DIBA ETF