For several years, cryptocurrency businesses have attempted to imitate certain aspects of the US stock market on the blockchain for use by investors in digital assets worldwide, frequently without too much concern for first obtaining regulatory approval.
The most recent idea, however, aims to convert stocks into cryptocurrency tokens without breaking securities regulations and has received support from one of Wall Street’s most renowned trading firms.
As long as the Financial Industry Regulatory Authority gives its final clearance, the co-founders of Dinari have bought a broker-dealer in the US.
They have also registered as a transfer agent with the Securities and Exchange Commission, which enables the business to carry out activities including paying dividends and keeping track of stockholder information.
The initiative is one of many that are being made to convert physical goods into digital tokens that can be traded on blockchains. Decentralized finance, which advocates believe will become a more open and decentralized version of Wall Street, once provided triple-digit returns in a period of historically low interest rates.
However, things have changed as a result of major lending ventures failing last year and a climate where traditional assets offer more advantageous returns due to their greater safety.
These tokenized stocks, in contrast to some other initiatives, are backed one-to-one by real-world shares acquired by Dinari.
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Dinari: A New Platform to Tokenize US Stocks on the Terra Blockchain After the Collapse of Mirror Protocol
The Mirror Protocol, which is based on the Terra blockchain, was one of the most well-known earlier attempts to tokenize US stocks. Before Terra’s stablecoin collapsed, resulting in losses of almost $40 billion and a global manhunt for the project’s co-founder, Do Kwon, those unregistered tokens attracted SEC attention.
Both the United States and South Korea are requesting Kwon’s extradition to face prosecution for his alleged involvement in the stablecoin’s failure to retain its intended $1 value. Kwon is now serving a four-month sentence in Montenegro for traveling on a fraudulent passport.
Holders of tokens receive dividends but are not able to exercise direct shareholder voting. Every purchase generates a fee for the platform.
When it comes to developing features that even vaguely mirror those of the greatest stock market in the world, Dinari has its job cut out for it.
At first, stock token owners could only sell their tokens back to Dinari. The platform wants the tokens to be extensively used in the cryptocurrency market, either as loan collateral or as exchangeable currency for other security tokens.
The tokens cannot be purchased outside of US trading hours. Additionally, according to Jake Timothy, co-founder and chief technical officer of Dinari, the tokens must be kept by users in their own digital wallets because Dinari is non-custodial.
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Source: Finance Yahoo
