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 regulatory standards.
Blockstation is looking to integrate its crypto-currency trading system with various international stock exchanges to facilitate trading of cryptocurrencies such as Bitcoin, and soon they will add security tokens and ICO’s (initial coin offerings). And because the system works through regulated stock exchanges, it must be compliant with current country regulations and laws. Regulated stock exchanges have mostly sat on the sidelines while unregulated crypto-currency desks support a growing market. But a select few are dipping their toe in the crypto markets.
In order to access trading, the investor would go through their broker-dealer portal similar to a traditional securities trading environment. They can use fiat currency to buy cryptocurrency and would subject to KYC (know your client) and other onboarding requirements, the broker would provide them with a deposit address. All of the digital assets are kept offline in cold storage to provide security from hacking attacks.
In order to solve the important custody issue, the physical settlement of digital assets and fiat once traded between counterparties, Blockstation has a Block Depository solution with a cold storage vault. It is used to create and store secure multi-signature deposit address for broker-dealers and their investors. says Jai Waterman, Blockstation’s chief enterprise architect.
To ensure that their entire trading, clearing and settlement 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 that we are using and testing along with exchanges, broker-dealers, investors and market makers. 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.”