Academic Research from Plato Partnership: Tokenized Stocks for Trading and Capital Raising

Research commissioned by Plato Partnership’s MI3 academic panel from Associate Professor Katya Malinova and Professor Andreas Park

London, UK, 14/02/2023 - Plato Partnership, the not-for-profit company bringing creative solutions and efficiencies to today’s equity marketplace, today released a new piece of independent academic research entitled ‘Tokenized Stocks for Trading and Capital Raising’. The research has been conducted by leading academics Associate Professor Katya Malinova from McMaster University and Professor Andreas Park from the University of Toronto.

The market for crypto assets has seen a tremendous boom and an equally impressive bust cycle in less than two years. Despite the gold rush and scams that emerged during this time, the underlying blockchain technology holds immense promise for the traditional financial services industry.

The research provides an in-depth look at asset tokenization, examining core principles and components of public blockchains, the functions and potential usage of tokens, token issuance mechanisms, and the challenges and advantages of digital assets for implementing traditional asset functions such as dividend payments, shareholder voting, and shareholder communications.

Key findings of the research include:

·         Blockchain technology can simplify and streamline back-office operations, enable new interactions between issuers, financial firms, and investors, and allow innovative service models in digital asset issuance and management.

·         Tokens are always owned by a blockchain address, but an address doesn’t yet signify an individual or a business entity.

·         Tokenization can decouple the functions of traditional assets such as dividends and voting rights.

·         Custody of digital assets may shift the relationship between investors and financial institutions.

The paper concludes by highlighting several areas that require further study, such as token registry standards, backed or asset-linked tokens, and a failsafe reconciliation process if the blockchain fails.

This research is part of Plato Partnership’s Market Innovator (MI3) initiative, where the industry collaborates with leading academics to select the most important research topics for the marketplace. Plato then commissions, sponsors, and makes the research available for all market participants.

Read the full paper HERE.