The Jamaica Stock Exchange announced on August 14 that it had selected Blockstation, a Toronto-based fintech company, to enable investors to trade blockchain tokens within a secure regulatory framework. With their partnership cemented, the JSE could be the first stock exchange to introduce its own online digital currency and trading platform compliant with international regulatory standards.
Blockstation is looking to integrate its crypto-trading system with various exchanges to facilitate stock trading via security tokens. And because the system works through regulated stock exchanges, it must be compliant with current trade laws.
In order to access trades via blockchain, the investor must hold a digital wallet and a private key. Unfortunately, many users manage these keys carelessly and make themselves vulnerable to attacks.
To make managing private and public keys safer, one of Blockstation’s objective is to migrate the responsibility of key management onto the broker via the introduction of offline cold storage vaults. The vault is used to store and create a multistate, multisig trade address for investors. When an investor wants to enter into the trading system, the broker would issue them a private key along with the address. “The whole process can be done in under 10 minutes.” says Jai Waterman, Blockstation’s chief enterprise architect.
For companies that cross-list their stocks, Blockstation is in the process of developing a global security token that integrates with the share certificate of non-tokenized stocks. In the meantime, the shareholder would destroy the share certificate and turn the equal number of shares into tokens.
To ensure that the model is solid, Waterman also told ITWC that they’ve set up a mock trading system to anticipate real-world trading scenarios. “In order to train for the whole lifecycle…we actually set up an entire stock exchange and the ecosystem within one day. So we’re at the stage of deploying very quickly,” said Waterman.
With the technology looking hopeful, the next question is when. In an interview with CoinDesk, JSE managing director Marleen Street Forrest said:
“We have a steering committee that was designed and formulated to look at the Blockstation product, to look at the blockchain technology in general and to go through the phases to ensure that we understand what we are getting involved with and are also trained in what this entire trading of cryptocurrency involves.”
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