The Signum Digital security token offering (STO) has been granted preliminary approval by the Hong Kong Securities and Future Commission (SFC). Signum Digital is a joint venture between Coinstret and Somerley and the move by SFC follows an open call by Hong Kong authorities for licencing applications to trade virtual assets. The regulator released proposed guidelines for the implementation of virtual assets trading platforms in February, with the program set to roll out in June 2023.
STOs and how they could impact investment
Tokenised shares in physical assets like real estate, may be represented by STOs, a new class of digital assets based on blockchain technology. In real time, digital assets can be traded on a transparent and efficient platform built on blockchain. The blockchain records transactions in a way that makes them permanent and unchangeable. This is made possible thanks to automated smart contracts that can be implemented at low cost.
Signum Digital’s STOs carry a moderate level of risk because they are backed by real assets and income streams. The groundbreaking nature of the SFC’s licencing of Signum Digital’s STO platform has the potential to significantly change the way in which companies raise capital. After getting final approval from the SFC in Hong Kong, Signum will launch the STO platform under the CS-Pro brand.
Security tokens (STOs) are digital assets that can be brought and sold on the blockchain and are backed by real-world assets like private equity, real estate, art, collectibles, carbon credits and other alternative investments. Signum Digital intends to provide a platform for these tokens to be accessible to institutional investors. In the end, the target is to remove the existing barriers that have made it difficult for SMEs to raise capital through traditional channels. This will likely make SMEs attractive to more investors, with shared mutual benefits between the two entities.