Digital Securities Transform the Private Capital Market, article by Ulyana Shtybel, Ph.D, CCO of Quoroom for Capital Markets CIO Outlook Magazine: Special Edition on Capital Market Tech.
Investors are used to the fact that investing in private companies is manual, complicated and illiquid, and these are among the main reasons that private companies are considered a more risky type of investment.
This was never the case for public companies as their securities are dematerialised, meaning issued electronically. Electronic issuance of securities allows them to be easily transferable and as a consequence more liquid.
Now after the breakout of Distributed Ledger Technology (DLT), private companies can utilise permissioned distributed networks for issuance of securities in book-entry form. They also can maintain the blockchain-enabled share register, which captures every single electronic movement of ownership while providing an easy way to passively meet compliance obligations: real-time maintenance of company records, shareholders management, transfers of the titles of the ownership.
