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## Blockchain-based stock trading platform Dinari obtains regulatory approval for tokenizing stocks


Dinari, a blockchain-based stock trading platform, has received regulatory approval to tokenize stocks. This license is pending final approval from the Financial Industry Regulatory Authority and would enable Dinari to create a blockchain-based version of the US stock market while complying with securities laws. Bloomberg reported this news on Monday.

To facilitate this process, Dinari has registered as a transfer agent with the Securities and Exchange Commission. This allows the company to carry out important tasks such as distributing dividends and maintaining records of securities ownership.

The company introduced its flagship product, Dinari Securities Backed Tokens (dShares), last week. These tokens allow investors outside the US to use cryptocurrencies for purchasing shares of major US companies and exchange-traded funds (ETFs), including Tesla, Walt Disney, and Nvidia.

The dShares platform operates under Regulation S, which permits SEC-compliant sales of securities to overseas investors. It’s important to note that Dinari’s tokenized stocks are backed by real-world shares acquired by the company. The custody for the actual equities is provided by Alpaca Securities and Interactive Brokers Group.

Dinari has secured investments from notable firms such as Susquehanna International Group and has received support from industry figures like former Coinbase Global executive Balaji Srinivasan.

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## Real-World Asset Tokenization on the Rise

Dinari’s project aligns with the increasing interest in real-world asset tokenization. Proponents of tokenization believe that it can introduce greater transparency and decentralization to Wall Street.

While previous attempts to tokenize US stocks, like the Mirror Protocol, faced regulatory scrutiny, Dinari aims to operate within the bounds of the law. Customers who have been verified under “know your client” rules can purchase tokenized shares using stablecoins such as USDC.

Although token holders earn dividends, they do not possess direct voting rights as shareholders. Dinari charges a fee for each purchase, and all trades are recorded transparently on the blockchain. The company intends to involve a third-party auditor to ensure compliance.

That being said, there are challenges that Dinari must overcome in order to replicate the functionalities of the world’s largest stock market. Token holders can only sell their tokens back to Dinari, and token purchases are restricted to US trading hours. Furthermore, users must hold the tokens in their own digital wallets as Dinari is non-custodial.

“The end game of Dinari is to use our broker-dealer licenses to be able to have an operating exchange where these securities can be traded,” said Chas Rampenthal, co-founder and chief legal officer of Dinari. He emphasized that the company is focusing on gradual progress in order to establish a strong foundation.

According to analysts at global investment bank Citi, the rise of central bank digital currencies (CBDCs) and the tokenization of real-world assets will drive the next wave of mass adoption of blockchain technology. This further emphasizes the potential impact of Dinari’s efforts in the broader context of the blockchain industry.

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