The Barbados Stock Exchange is closer to enabling security token trading, but is staying away from cryptocurrencies such as Bitcoin, BSE Managing Director Marlon Yarde has revealed.
While not providing an official launch date, Yarde told a Barbados International Business Association (BIBA) online fintech seminar that the BSE would soon be introducing a pilot project for the listing and trading of Security Token Offerings.
Those assets would include equity, debt instruments and investment fund vehicles, which would be traded as digital tokens to protect their security.
“We are excited at the promise of blockchain technology and remain optimistic that our soon to be launched pilot will redound to the benefit of enhanced capital markets for compliant market participants,” said Yarde, who pointed out that the BSE was being conservative in its approach.
He made it clear that the BSE had no interest in cryptocurrencies due to several regulatory concerns globally.
He said: “As a regulated internationally recognized exchange, we are simply not interested in getting into cryptocurrency trading in any way at this point. What we are interested in is the use of blockchain technology particularly to strengthen the processes we are already familiar with and use.
“One example is the use of security tokens which can mimic the performance of traditional securities, like equity, debt and investment funds. We want to do what we are doing now in the blockchain environment. The only difference is that security tokens can be issued from blockchain, allowing regulators, exchanges, issuers and stakeholders a level of enhanced transparency throughout the entirety of the issuance cycle.”
In early 2019, the BSE signed a memorandum of understanding with the Canadian fintech firm Blockstation in an effort to come up with the most appropriate blockchain technology for the BSE.
This was done following the development of rules and guidelines for digital assets toward the end of 2018, and their subsequent approval at the beginning of 2019.
Yarde said the rules would allow Blockstation and the stock exchange to pilot an “ecosystem” for “brokers, regulators and prospective market actors”.
He added: “During this pilot, security tokens will be inaccessible to the general public as we test out the Blockstation platform and address any teething issues that may arise.
“What should be noted is that even though these rules define digital assets in a sufficiently broad manner, we are specifically only interested in facilitating security token trading.”
The stock exchange boss said there continued to be several questions occupying the BSE’s plan.
He said: “What are securities for example, what are commodities, and money transmissions and other regulatory issues. These are things that continue to occupy our minds.
“There are also jurisdictional considerations – how do we assess these regulatory issues by jurisdictions, how will these impact offerings, who will be allowed to invest?”
He was addressing the BIBA online fintech seminar on “enabling the tech business value chain”.