Regulation is set to help bridge the gap between traditional securities and on-chain STOs.
Regulation of the cryptocurrency space has been front of mind recently. While much of this has been driven by governments seeking to gain better visibility of crypto markets, the knock-on effect has prompted many exchanges to better understand the customers using their platforms. While this is often seen as a bad thing by many within the crypto space, it’s likely that this fresh round of regulation could help to unlock the $7.5 trillion addressable market for private assets.
While the crypto space has seen significant growth over the last four years, the perceived risk felt by retail investors in stocks, real estate, and other regulated asset classes have prevented them from joining the on-chain market.
Securities Investors Need More Comfort
Retail trading now accounts for almost as much volume as mutual funds and hedge funds combined. If better regulation of both CEX (centralized exchanges) and DEX (decentralized exchanges) helps to bring more of these investors to the table via STO (security token offerings), then the entire crypto space would benefit.
The safety net these investors have come to rely on has been proven over time through regulation and appropriate licensing. By approaching the crypto space in a similar way, these investors are likely to be tempted to begin looking at investing and trading in SAPs in the very near future. And of course, this is likely to lead them to diversify their portfolios into crypto.
Stepping Stones Toward Regulation
The SEC recently warned that the $2 trillion industry is too big to exist outside of the ‘public policy framework’. But they are not the only government seeking to drive regulation within the cryptocurrency space. India, the EU, United Kingdom, and China have been seeking to make the space — and the exchanges which power it — a safer place for investors for some time now.
One key part of this is KYC (know your customer). This is the process of requiring ID from all platform customers, which allows for great visibility. This regulation is enforceable across centralized exchanges, where on-chain assets can directly be purchased for fiat (currencies such as USD, GBP, or EUR). Most recently, Binance began adding this to all their customer accounts following pressure from the UK.
This can only be a good thing for the industry, as with greater transparency comes greater trust. And this will be vital in pulling traditional investors into a space often perceived as the wild west by off-chain retail investors.
Bridging the Gap Between Wall Street, CEX, and DEX
By providing a secure and trustworthy bridge between CEX and DEX, IX Swap is able to connect the dots between off-chain investors seeking the more regulated experience of a centralized exchange, with the wider variety of STOavailable across decentralized exchanges.
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About IX Swap
IX Swap is the “Uniswap” for STOs and TSOs, the regulatory and liquidity solution for security tokens and tokenized stocks.
IX Swap will be the FIRST platform to provide liquidity pools and automated market-making functions for the STO/TSO industry. The platform will facilitate the trading of security tokens through licensed custodians and security brokers, which will provide actual ownership and claim over these real-world assets.