Ethereum Tokens to Trade on Swiss Stock Exchange via R3 Tech

Public blockchain tokens will soon be trading on a major securities exchange.

Revealed exclusively to CoinDesk, Swiss security token firm BlockState plans to "Passport" half a dozen ERC-20 tokens from ethereum, the second-largest public blockchain, to Corda, the private distributed ledger technology platform developed by R3. Before the end of the year, the tokens will be locked up in a smart contract on ethereum and "Mirrored" versions of them will run on Corda.

What's more, the passporting will take place on the network R3 is building for the Swiss Digital Exchange - part of SIX, Switzerland's national stock exchange and the world's 13th largest.

"The way they are doing that is with SDX, by issuing tokens that were on ethereum onto Corda."

The reason for doing this is to open a wider market for issuers of security tokens, including institutional investors who don't want to bother managing an ethereum wallet and would rather leave custody to SDX. "A retail investor probably wouldn't go through a financial institution connected to a regulated secondary market if he is also able to just hold an ERC-20 token in custody," said Blockstate CEO Paul Claudius.

Such convergence of public and private blockchains shows how the industry has changed since a few years ago when ethereum and R3 stood at opposite ends of the decentralization spectrum.

The two communities were also highly critical of each other, with R3 calling public blockchains unfit for enterprise use and ethereum devs dismissing R3 as a glorified workflow database.

There were signs of change afoot a year ago when open-source developers began working on an equivalent of ethereum's ERC-20 standard to create tokens representing various assets on Corda.

Now, BlockState's own security token offering, which is underway, will be the first pilot integration into Corda.

As well as issuing tokens onto Corda, BlockState is registering them as securities in Switzerland, known for its conducive regulations and vast network of private banking, family offices and high net worth investors ready to buy newfangled digital assets.