The Bitfinex exchange is trying to issue tokenized securities on the Liquid sidechain this year. It was only moderately well received by the market – but the stock exchange announced that it would pursue the strategy with patience.
Tokenized securities, Bitfinex wrote on the company blog, “are revolutionary because they apply the technical leap forward demonstrated by cryptocurrencies like Bitcoin to traditional regulated securities.”
How true: Tokenized securities – security tokens – can be stored autonomously and traded and settled in real time around the clock on P2P markets. These are advantages that classic securities “simply cannot achieve”.
The approach deserves attention. Typically, mainstream capital seeks to use “blockchain technology” – or “digital ledger technology” (DLT) – to digitize traditional securities such as bonds or stocks, while largely ignoring the cryptocurrency market with its many achievements. Bitfinex, on the other hand, originates from the crypto market and has repeatedly shaped it. So Bitfinex’s tokenized securities come from exactly the opposite direction.
To this end, Bitfinex founded the subsidiary Bitfinex Securities in Astana, Kazakhstan in September 2022. The first tokenized security to go live on the platform was the “Blockstream Mining Note”. This allows investors to invest in mining farms set up by Blockstream. Within a relatively short period of time, $6.75 million was raised.
Technically, securities run as tokens on Blockstream’s Liquid sidechain. This has been intended to help Bitcoin scale off-chain since 2018, but is, to put it well-meaning, poorly received by the market. Currently, only accredited, i.e. professional investors who bring in at least $100,000 are allowed to invest in the tokenized securities. The base currency is the stablecoin Tether (USDT), which is issued by the Bitfinex sister company Tether.
On November 15th, Bitfinex launched the second tokenized security, which has the somewhat abstract title ALT2611. This is a coupon bond that runs for 36 months and bears interest at 10 percent. It is launched by “Alternative”, a Luxembourg fund that Mikro Kapital manages. The minimum investment is 125,000 USDt; on the secondary market you can trade the tokens for as little as 100,000 dollars.
The initial capital raise by ALT2611 was expected to raise $10 million in two weeks. With that goal remaining a long way off, Binfinex has extended the deadline to December 18th. But even now the paper has only brought in a third of the planned amount. This is certainly not the success that Bitfinex hoped for. The tokenized securities were actually intended to usher in a new era in which Tether dollars would become the base currency and the Liquid Sidechain would become the technical standard.
“It was always clear to us,” Bitfinex CTO Paolo Ardoino tells Cryptonews.com, “that it would take time for products that are inherently more stable and less speculative than cryptocurrencies to gain market share in the crypto industry “Is very focused on making quick profits.” But they also know that the speculative nature of crypto cannot be “sustainable”. Tokenized securities “will become the future of capital gathering for real world assets.” Don’t be afraid to pursue a long-term strategy through hard work.
In fact, Bitfinex is consistently moving forward with its plans to tokenize securities. While it signed a cooperation agreement with Kazakhstan’s largest stock exchange in Astana, Bitfinex only recently received a full exchange license in El Salvador, including the right to trade tokenized securities. On the newly founded platform “Bitfinex Securites El Salvador”, innovative tokenized securities will be issued and traded in a fully regulated manner, independently of Bitfinex Securities Astana.