Reading 2021-10-29


Notes from reading

ref: Investopedia
Tokenized equity refers to the creation and issuance of digital tokens or "coins" that represent equity shares in a corporation or organization.

The underlying blockchain infrastructure also supports all necessary activities applicable to the tokenized equity shares. For example, all popular corporate actions like dividends, mergers, and acquisitions, and other activities like shareholder voting and follow-on equity sale offers are also handled by the necessary blockchain system.

For instance, Templum is one such blockchain-based platform that is aiming to become the leading regulatory-compliant platform for tokenized asset offerings and their secondary trading.

ref: FTX Crypto Derivatives Exchange


FTX Switzerland (Canco GmbH) is authorized to provide brokerage services for tokenized stock trading.

Tokenized Stocks, like the rest of FTX, are not being offered to US users or other prohibited jurisdictions, potentially including Iran, Afghanistan, North Korea, Hong Kong, Singapore, and/or other jurisdictions.

Users must pass sufficient KYC checks in order to trade tokenized stocks on FTX.

How is this trading regulated?

Canco GmbH (FTX Switzerland) is an authorized financial intermediary permitted to offer these products. All FTX users who trade tokenized stocks may also become customers of FTX Switzerland, and pass through it's KYC and compliance. Furthermore, all trading activity may be monitored for compliance by FTX Switzerland. FTX Switzerland custodies the equities at a third party brokerage firm. Canco GmbH (FTX Switzerland), instead of FTX Trading Ltd, FTX Digital Markets Ltd or other affiliates, provides the brokerage services.

In order to trade tokenized stocks on FTX, you must be at least KYC level 2. Once you are, you can go to your tokenized stocks KYC page to submit your information to FTX Switzerland. You must also not be a member of one of FTX's restricted jurisdictions, including the United States; FTX collects KYC documents and IP addresses from its users. FTX does not operate in its restricted jurisdictions.

What exactly is traded on FTX?

FTX itself lists tokens on the equities. For instance, is a market to trade tokens on Tesla stock.

These spot tokens are backed by shares of Tesla stock custodied by FTX Switzerland. They can be redeemed with FTX Switzerland for the underlying shares if desired.

Who can trade tokenized stocks on FTX?

In order to trade tokenized stocks on FTX, you must be at least KYC level 2.

Once you are, you must go to your tokenized stocks KYC page to submit your information to FTX Switzerland. This is required to pass through Canco GmbH's (FTX Switzerland's) KYC and compliance.

You cannot trade tokenized stocks on FTX from any of the restricted jurisdictions, including the United States.

How are corporate actions handled?

Holding tokenized stocks on FTX entitles users to dividends, etc. of the underlying stock. FTX will pursue all reasonable actions to have the tokens on FTX reflect the corporate actions of the underlying equities, including through dividends and stock splits. It is not anticipated that the shares will exercise their voting rights but FTX Switzerland may do so in its discretion.

For US listed products, the dividends on FTX will be paid out at 2pm HKT on ex-date. At this time US equities are closed, and it's between after-hours and pre-open trading.

We will continue to investigate but for now dividends will be paid out gross of tax, and it will be up to each user to understand the tax consequences of any dividends they receive.

Dividends will generally be credited to your account around 2pm HKT.

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