Binance and Maltese Stock Exchange Security Token Exchange Partnership
The Cryptocurrency Exchange, Binance and the Maltese Stock Exchange (MSE) have reached a memorandum of understanding (MOU) to partner on settng up a security token exchange.
The new security token exchange will allow customers to buy and sell security tokens. Their hope is that Malta will become the main destination for cryptocurrency and blockchain business.
Security tokens utilize the same technology as found with most utility tokens. The key difference between a security token and a utility token is that the investors purchasing security tokens fully understand that they are investing and expect some sort of return on their investment.
Security tokens are still relatively new in the investment world as well as in the cryptocurrency sector. Nonetheless recently is has been gaining a substantial amount of traction. There is a lot of regulatory uncertainty surrounding utility tokens. One example is the USA Securities Exchange Commission (SEC) continuous deliberations as to whether Ripple’s XRP token is considered a security.
Fortunately, tokenized securities are already covered by existing financial regulations. This means companies and potential investors have more certainty from a legal and regulatory perspective.
Binance’s CFO Wei Zhou told the Times of Malta that the news meant the exchange could start building a viable blockchain sector on Malta. He said:
This partnership will allow Binance and MSE to host traditional financial assets on blockchain technology through security tokens.
We look forward to bringing more innovations to Malta and further establishing our presence here.
Why is the Binance Malta Partnership Important
Binance has expressed an interest in expanding its operations in Malta for some time now. After its dispute with Japanese regulators, CEO Changpeng Zhao said the exchange would be moving its operations base to the Mediterranean island. The country’s Prime Minister, Joseph Muscat, have expressed that this is a great opportunity for Malta to showcase itself to the cryptocurrency sector as a friendly regulatory climate.
The Government of Malta passed three blockchain bills this summer. The bills are designed to give a clear legal framework for businesses.
This breaking news is a sure-fire promising sign for Malta. Binance is the largest cryptocurrency exchange in the world in terms of trading volume.
In a year with significant losses incurred by investors, Binance, the world’s largest cryptocurrency exchange by trade volume, has already made about $300 million dollars in revenue. In addition, according to CEO, Changpeng Zhao, the trading platform expects to accumulate a net profit of $500 million to $1 billion USD for the whole 2018.
The average daily turnover at Binance, which was launched about a year ago, is around $1.5 billion, according to its founder and CEO. Changpeng Zhao also stated that Binance now has 10 million users. This is a huge increase from 2 million users at the beginning of 2018.
Creating legitimate financial services for the trading of security tokens will help keep the country ahead of rival economies also trying to capitalize on the emerging cryptocurrency investment sector.
Companies are purporting to develop stablecoins attached to physical assets such as USD and Gold while at the same time distributing shares/dividends to coin holders. Global regulations consider that approach out of compliance. But getting the legal go-ahead to trade security tokens on a regulated platform is a game-changer.
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