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Dinari is first tokenized equity platform to get US

approval

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Coinbase, Kraken also exploring blockchain-based stocks

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Proponents say tokenized stocks could reduce trading costs

By Hannah Lang

June 26 (Reuters) - Dinari, a startup that offers

blockchain-based U.S. stocks, has secured a broker-dealer

registration for its subsidiary, a move the company says makes

it the first tokenized equity platform to secure such approval

in the U.S.

The move allows San Francisco-based Dinari to offer stock

trading via blockchain technology for the first time to

investors in the U.S., an offering that crypto companies like

Coinbase and Kraken are also actively exploring as

firms look to capitalize on an evolving U.S. regulatory stance

toward cryptocurrencies.

Tokenizing equities is a process in which shares of a

company are converted into digital tokens, similar to how

cryptocurrencies are traded. Instead of holding the securities

directly, investors hold tokens that represent ownership of the

securities.

Proponents have said that tokenized equities could reduce

trading costs, enable faster settlement, and facilitate

around-the-clock trading.

"For me, the end game is how can we elevate the entire

financial system, which means not just a broker-dealer that's on

chain, but an exchange that's on chain," said Gabriel Otte, the

co-founder and CEO of Dinari.

"But where it starts is creating a tokenized stock standard

that's actually legal in the United States. No one else can

claim that today," he added.

Unlike retail brokerages like Charles Schwab or Robinhood,

Dinari works with other companies to integrate its interface

into their platforms instead of offering its services directly

to customers.

Dinari will begin making its broker-dealer entity

operational in the coming quarter, the company said. Otte added

that Dinari has already arranged several partnerships, which he

declined to name on the record.

Dinari's tokenized equities -- called dShares -- are already

available via decentralized finance platforms like Coinbase's

Base blockchain network, but only for users outside of the U.S.

Tokenized equities have become a buzzword among crypto

industry participants as many companies have announced plans or

are exploring new ways to use blockchain technology.

Crypto exchange Kraken said last month that it is launching

tokens of U.S. equities, called xStocks, which will be available

in select markets outside the United States. Coinbase is also

seeking a green light from the U.S. Securities and Exchange

Commission to offer tokenized equities to its customers, the

crypto exchange's chief legal officer said.

Still, critics have said there are plenty of gaps that need

to be addressed before tokenized equities can be commonly

traded. The World Economic Forum, in a report last month,

pointed to a lack of sufficient secondary-market liquidity as

well as the lack of a clear global standard as two major

challenges for adoption.