The Canadian Securities Exchange (CSE) ‎is taking first steps to bring crypto fundraisers, or ‎initial coin offerings (ICOs), within the regulatory framework. While ICOs have come ‎under regulatory scrutiny this year, the CSE believes that digital crowdsales can be done right, ‎with built-in safeguards to avoid fraud. ‎

Specifically, the Canadian Securities Exchange is introducing a securities clearing and settlement platform ‎which is being built on the Ethereum blockchain.‎The platform creates an innovative funding model for businesses through which they will ‎be able to issue conventional equity and debt using the so-‎called security token offerings (STOs). The tokenized securities will also give retail investors the ‎comfort of knowing that they are purchasing instruments that can stand up to the scrutiny of ‎regulation

Kabuni Technologies Inc., a Vancouver-based startup that tracks 3D printing products ‎on its blockchain-based platform, is the first company to file a prospectus ‎with British Columbia’s regulator to win approval of issuing tokens to investors through a ‎STO.‎

In addition, the tokens could then be traded on the Canadian Securities Eexchange’s equity trading platform, which ‎marks the first time a tokenized security has been listed for trading on a regulated exchange.‎

Although Kabuni will have to go through a lengthy process to launch its token, we expect there will be many more soon in existence. ‎The CSE platform is necessary in order to lower the ‎barriers to entry for launching securities, similar to how Ethereum ‎made it easy to launch utility coins.‎

Indeed, the emergence of securities tokens could be the ‎next mega-trend in the crypto space as STO tokens are backed by ‎real assets like equity, shares or commodities.‎

Like many jurisdictions around the world, Canada is looking for ways to regulate ‎ICOs and harness the unique features of blockchain technology without ‎stifling innovation or driving startups to other jurisdictions.‎

Unlike ICOs, the STOs will be subject to full regulation by applicable securities ‎commissions. The new platform also answers one of the most ‎pressing questions facing the crypto and financial services communities, which is how ‎regulatory authorities will treat various digital assets. ‎