The Canadian Securities Exchange (CSE) announced today its plan to introduce a  Blockchain  Blockchain Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Blockchain comprises a digital network of blocks with a comprehensive ledger of transactions made in a cryptocurrency such as Bitcoin or other altcoins.One of the signature features of blockchain is that it is maintained across more than one computer. The ledger can be public or private (permissioned.) In this sense, blockchain is immune to the manipulation of data making it not only open but verifiable. Because a blockchain is stored across a network of computers, it is very difficult to tamper with. The Evolution of BlockchainBlockchain was originally invented by an individual or group of people under the name of Satoshi Nakamoto in 2008. The purpose of blockchain was originally to serve as the public transaction ledger of Bitcoin, the world’s first cryptocurrency.In particular, bundles of transaction data, called “blocks”, are added to the ledger in a chronological fashion, forming a “chain.” These blocks include things like date, time, dollar amount, and (in some cases) the public addresses of the sender and the receiver.The computers responsible for upholding a blockchain network are called “nodes.” These nodes carry out the duties necessary to confirm the transactions and add them to the ledger. In exchange for their work, the nodes receive rewards in the form of crypto tokens.By storing data via a peer-to-peer network (P2P), blockchain controls for a wide range of risks that are traditionally inherent with data being held centrally.Of note, P2P blockchain networks lack centralized points of vulnerability. Consequently, hackers cannot exploit these networks via normalized means nor does the network possess a central failure point.In order to hack or alter a blockchain’s ledger, more than half of the nodes must be compromised. Looking ahead, blockchain technology is an area of extensive research across multiple industries, including financial services and payments, among others. Read this Term-based clearing and settlement platform for security trades. The platform will allow companies to issue traditional equity or debt instruments using a digital token, called tokenized security, which will represent the company’s share.

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According to the CSE, blockchain technology will allow the platform to confirm the trade orders in real-time rather than two business days taken in the conventional system.

In the official statement, Richard Carleton, CEO of the CSE, said: “This is a landmark announcement for the Canadian capital markets. The Canadian Securities Exchange expects to be the first recognized exchange in Canada to introduce a fully developed blockchain platform for trading, clearing and settling tokenized securities.”

“Our platform represents an intersection between blockchain and the capital markets that delivers on blockchain’s promise to disrupt conventional transaction and record-keeping mechanisms, thereby providing tangible benefits for market stakeholders. By harnessing this technology, the potential exists to extend corporate finance beyond the limits of traditional equity and debt offerings,” he added.

The CSE has already acquired the licence for the technology from New York-based Fundamental Interactions, but has is yet to file an application with the Canadian market regulators.

Meanwhile, the exchange operators have already signed a memorandum of understanding with Vancouver-based Kabuni Technologies to issue tokens on the new platform via  Security Token  Security Token Security tokens are cryptocurrency tokens that represent a contract into an underlying security, which could include stocks, funds, bonds, and real estate investment trusts (REITs.) Security tokens can also be used as a method of fundraising. A security token offering (STO) is similar in nature to an initial public offering (IPO), however involves tokenized digital securities, known as security tokens. These are then sold in cryptocurrency exchanges. Tokens can be used to trade real financial assets such as equities and fixed income, and use a blockchain virtual ledger system to store and validate token transactions.In a regulatory sense, tokens are classified as securities and are more susceptible to oversight. This makes them more secure relative to other alternatives such as initial coin offerings (ICOs), which have resulted in countless cases of fraud.Many STO can also be held on regulated stock exchanges that can be characterized as tokenized IPO. These offerings have benefits, including the potential to deliver significant efficiencies and cost savings.Where Are STOs Legal?STOs are regulated and legalized in several countries where ICOs have not. This makes them the preferred method of fundraising and are fully regulated in following jurisdictions: European Union, Germany, United Kingdom, Switzerland, United States, Canada, Brazil, Australia, Israel, Singapore, Japan, and Hong Kong.In particular, STOs are placed under securities legislation. Even in the aforementioned jurisdictions however, security tokens still require a connection to a registered company with real assets being sold.There is some degree of controversy surrounding security tokens, mainly as a means of their classification. There exists a debate surrounding security tokens as to their legal differentiation of whether they can be characterized as a utility instead of a security. Traditionally, a passive financial return is expected from the investment, thus it is classified as a security. Security tokens are cryptocurrency tokens that represent a contract into an underlying security, which could include stocks, funds, bonds, and real estate investment trusts (REITs.) Security tokens can also be used as a method of fundraising. A security token offering (STO) is similar in nature to an initial public offering (IPO), however involves tokenized digital securities, known as security tokens. These are then sold in cryptocurrency exchanges. Tokens can be used to trade real financial assets such as equities and fixed income, and use a blockchain virtual ledger system to store and validate token transactions.In a regulatory sense, tokens are classified as securities and are more susceptible to oversight. This makes them more secure relative to other alternatives such as initial coin offerings (ICOs), which have resulted in countless cases of fraud.Many STO can also be held on regulated stock exchanges that can be characterized as tokenized IPO. These offerings have benefits, including the potential to deliver significant efficiencies and cost savings.Where Are STOs Legal?STOs are regulated and legalized in several countries where ICOs have not. This makes them the preferred method of fundraising and are fully regulated in following jurisdictions: European Union, Germany, United Kingdom, Switzerland, United States, Canada, Brazil, Australia, Israel, Singapore, Japan, and Hong Kong.In particular, STOs are placed under securities legislation. Even in the aforementioned jurisdictions however, security tokens still require a connection to a registered company with real assets being sold.There is some degree of controversy surrounding security tokens, mainly as a means of their classification. There exists a debate surrounding security tokens as to their legal differentiation of whether they can be characterized as a utility instead of a security. Traditionally, a passive financial return is expected from the investment, thus it is classified as a security. Read this Term Offerings. With this decentralized initiative, the CSE will look to challenge the long-held monopoly of TMX Group in securities settlement.

TMX Group owns the Canadian Depository for Securities Ltd., a firm which serves as the countries primary hub for securities and fixed income clearing and settlement.

“We look forward to working with regulators and with corporations seeking to raise capital through STOs to fully realize the benefits of the new platform. We believe it represents a tremendous opportunity for stakeholders in the Canadian marketplace,” Carleton concluded.