Binance <> Malta Stock Exchange Form Partnership

Binance has announced a partnership with the Malta Stock Exchange by way of Memorandum of Understanding to jointly develop a security token exchange. Through this partnership Binance seeks to evolve its business alongside the perception that the security token market may develop to be even more consequential than the traditional equity market. Similarly, Malta as a jurisdiction pursues substantive progress to cement its recognition as a blockchain-friendly regulatory environment.

 

Using our ecosystem framework established in our Security Token Ecosystem article, we assess that partnerships between crypto exchanges and smaller national stock exchanges will be a growing trend in the security token industry.

 

We also assess that this new mode of partnership will subject pure security token exchanges to significant external pressures, forcing them to accelerate development timelines and user acquisition.

 

By pooling resources, crypto exchanges and small national stock exchanges are able to strategically compensate for each other’s vulnerabilities.

 

Crypto exchanges, for example, have a massive captive user base that is already familiar with trading cryptocurrencies. In fact, Binance regularly reports daily volumes greater than USD$1 billion. However, what Binance lacks is a transnational securities regulation compliance framework and the holy grail of secondary market liquidity: institutional money.

 

Small national stock exchanges, on the other hand, have domicile in cypto-friendly jurisdictions, are already compliant with securities regulation and have access to institutional investors and traders. What they lack is high turnover, a user base that understands crypto, and a competitive advantage over larger national stock exchanges such as the NYSE.

 

A collaboration between the two creates an entity that is highly competent in crypto trading, has a massive user base that is comfortable trading crypto and equity, has the regulatory understanding to support securities trading, and has access to institutional funds and a supportive jurisdiction. This entity will thus theoretically have the initial traction to begin developing a competitive advantage over the larger national stock exchanges that seek to develop security token trading in-house (such as SIX Swiss).

Crypto Exchanges

Have

Massive captive crypto user base

High daily volumes

Lack

Regulatory framework

Institutional money

 

Small National Stock Exchanges

Have

Crypto friendly jurisdictions

 Regulatory compliance

Institutional money

Lack

High turnover

Crypto user base

Competitive advantage over large stock exchange

 

Partnerships

Have

Massive captive crypto user base

High daily volumes

Crypto friendly jurisdictions

Regulatory compliance

Institutional money

Lack

Nothing

 

Ultimately, this development poses the greatest threat for pure security token exchanges.

 

Pure security token exchanges have identified various shortcuts that will reduce the time it takes for them to develop and launch their product. We cover these extensively in our analysis article The Security Token Ecosystem.

 

However, the fact of the matter is that security tokens want to excel in two domains (crypto and securities) that are already owned by industry incumbents. Whereas these industry incumbents already have product market fit, a large user base and significant traction, pure security token exchanges are still in various stages of development.

 

This is not to say that pure security token exchanges will not become a major driving force in the industry. Our view is simply that competition for turnover in the security token industry is just starting to heat up.

 

We assess that the window of opportunity for exchange players to jostle and assert market dominance is closing quicker than many might realize. Fervent competition among exchanges will ultimately accelerate adoption of the entire security token industry as a whole.

More Security Token News & Analysis

Subscribe to The STN Newsletter

Ultimate Security Token Guide - The Full Series

Series One - Security Token 101

Should you Launch an STO?

Building upon the foundations and lessons learnt from token sales, this article introduces Security Token Offerings and whether you should launch one.

Read More »
Series One - Security Token 101

From ICO to STO

Sadly most ICO’s have been scams or failures, most have questionable business models, and they are a thorn in the side of regulators. STO’s could deliver the true promise of blockchain.

Read More »
Ecosystem

Equity Evolution or Revolution

Security tokens promise a financial revolution. Bringing lower fees, faster deal execution, free market exposure, larger global investor base, increased liquidity, automated services, cross border, and micro-ownership

Read More »
Series One - Security Token 101

Security Tokens Coming Of Age

ICO’s laid the foundations for decentralized crowdfunding, however have faced many challenges. Whilst STO’s are regulator friendly, we explain what needs to be done.

Read More »
Ecosystem

The Security Token Ecosystem

An introduction to the Security Token key players players. From; jurisdictions, regulators, token issuers, blockchain protocols, exchanges, influencers, wallet providers, to marketing agencies.

Read More »
Series One - Security Token 101

Security Tokens, The Story So Far

From Bitcoin and blockchain to ICO’s. Understand Security Token Offerings (STO), how tokenized assets are evolving, and the potential to drive the next great financial innovation.

Read More »
keyboard_arrow_up