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FAQ’s: Your Questions Answered.  

  1. What is a Tokenized Security?  
  • A tokenized security is a digital representation of a traditional financial asset, such as stocks or bonds, on a blockchain. This allows for easier transfer, increased liquidity, and fractional ownership while maintaining regulatory compliance similar to traditional securities. 
  1. Are Tokenized Securities Regulated? 
  • Yes, EC tokenized securities are subject to financial regulations similar to traditional securities. Issuers must comply with securities laws and regulations in the jurisdictions where they operate, and investors have similar protections as they would in traditional markets. The Eastern Caribbean Securities Regulator Commission is the Regulator for the EC-TSM. It operates under the Securities Act enacted in all eight ECCU member countries, namely: Anguilla; Antigua and Barbuda; Dominica; Grenada; Montserrat; Saint Lucia; St. Kitts and Nevis and St. Vincent and the Grenadines. 

3. How Do I Invest? 

To invest in tokenized securities on the EC-TSM, you need to contact one of the licensed, ECSE member Broker-dealers to set up your account.  The Broker-Dealer will review and approve your application, provide the necessary onboarding so that you can access your digital wallet online and place your buy or sell orders directly. 6. What Are the Risks Involved? 

  • Risks may include market volatility, cybersecurity threats, and liquidity challenges. As with any investment, it’s essential to speak with a broker dealer, conduct thorough research and consider your risk tolerance before investing. 

4. Can I Sell My Tokenized Securities Anytime? 

  • While tokenized securities can be traded on secondary markets, liquidity may vary depending on the asset and market conditions. Some tokenized securities might have lock-up periods or restrictions on when they can be sold. 

5. What is the Difference Between Tokenized Securities and Cryptocurrencies? 

  • Tokenized securities represent ownership in real-world assets like stocks or real estate, while cryptocurrencies are digital assets that may not be backed by any physical asset. Tokenized securities are regulated and offer legal rights, whereas many cryptocurrencies do not. 

6. How is My Investment Secured? 

  • Investments in tokenized securities are secured using blockchain technology, which provides a transparent and tamper-proof record of transactions. Additionally, regulatory oversight and smart contracts help ensure that investor rights are protected. 

7. What Happens If the Underlying Asset of a Tokenized Security Loses Value? 

  • If the value of the underlying asset decreases, the value of the tokenized security will likely decrease as well. Investors in tokenized securities are subject to the same market risks as those holding traditional securities. 

8. Do I Need a Digital Wallet? 

  • Yes, you typically need a digital wallet to store, send, and receive your tokenized securities. The wallet stores the private keys required to access and manage your tokens on the blockchain. 

9. How Do Dividends or Earnings Work on the EC-TSM? 

  • Dividends or earnings from tokenized securities are usually distributed automatically through smart contracts on the blockchain. These payments are made in accordance with the terms set out by the issuer of the tokens. 

10. Can Tokenized Securities Be Used as Collateral? 

  • Yes, tokenized securities can potentially be used as collateral for loans or other financial agreements, depending on the terms set by the lender and the platform. This can provide additional liquidity and financing options for investors.