Cantor Fitzgerald and digital asset firm Securitize are joining forces to bring blockchain technology into the heart of the IPO process, as traditional finance continues to embrace tokenization.
The companies said Wednesday they have partnered to help public companies issue tokenised securities in their initial public offerings and subsequent sales of shares, combining blockchain technology with the existing regulatory framework for public markets.
Under the partnership, Cantor Fitzgerald will leverage its equity capital markets and trading expertise and Securitise will provide the blockchain infrastructure to issue, distribute and manage tokenised securities.
The idea is to modernise the way companies raise capital, but without changing the traditional IPO structure.
How is the deal different?
The pact is not on tokenised investment funds or secondary trading, but the direct integration of blockchain into the issuance of public company shares.
The token will represent the actual security itself, not a wrapper, special purpose vehicle (SPV) or synthetic version of the asset, according to Securitise. Thus, tokenisation is part of the issuance process from day one, rather than layered on an existing security later.
The companies say the approach could improve operational efficiency, simplify ownership records and streamline the way that securities are issued and serviced, while staying fully within existing capital markets regulations.
Tokenization gains momentum across Wall Street
Earlier this week the Depository Trust & Clearing Corporation (DTCC) said it plans to take tokenised equities further with the help of big financial institutions including JPMorgan, Goldman Sachs, BlackRock and Vanguard. The move is part of a broader push by traditional finance to explore how blockchain could modernise the market infrastructure.
For Cantor Fitzgerald and Securitise, the tie-up is a vote of confidence that blockchain can improve, not replace, the workings of capital markets.
Public companies shouldn’t have to choose between access to traditional capital markets and the advantages of blockchain technology that enhances the way securities are issued, distributed, owned and serviced’, said Carlos Domingo, co-founder and CEO of Securitise.
This partnership combines the capabilities to enable capital formation onchain under existing regulatory regimes. “It’s another step toward a future where digital securities are a common way of doing business in capital markets.
“Tokenization is becoming a bigger and bigger part of mainstream finance,” said Pascal Bandelier, Co-CEO and Global Head of Equities at Cantor Fitzgerald.”Partnering with Securitise allows us to bring the rigour of traditional equity capital markets to onchain settlement and distribution,” he said. “This provides our clients with new and innovative ways to raise and access capital as markets evolve.
Interest in tokenised securities has grown sharply over the past year as banks, asset managers and market infrastructure providers search for ways to make financial markets more efficient. Tokenisation may help speed up settlement and lower administrative costs by recording ownership on blockchain networks, boosting transparency.
The Cantor-Securitize pact is another sign that tokenisation is becoming a part of the next generation of capital markets infrastructure as blockchain moves beyond cryptocurrencies and into traditional finance.
