Last year hasn’t been the strongest time for trading revenues–in fact, 2019 was a weak year. Investments globally may see an even weaker 2020 as uncertainty about the spread and duration of the new Coronavirus rattles capital markets. Concerns about COVID-19 could hold back capital market issuances and exacerbate an already predicted slowdown, according to market experts.
Because of this, many are left wondering what we can expect from the market as the virus continues to spread. Is this just a temporary dip, or should we all be battening down for further market downturns?
According to a Bankrate survey, 66% of investors haven’t touched their stock portfolios yet even amid the coronavirus market meltdown. On the other side of the coin, 11% said they’d move their money out of stocks, and 13% said they contributed even more to the market. Surprisingly, 10% said they weren’t aware of any market volatility.
This survey came out as the United States continues to struggle with the coronavirus pandemic and its effects on both markets and the economy. Global stocks have been shaken by the outbreak and fears that it will hinder global growth, ending the longest-ever bull market on record and sending stocks down more than 30% from all-time highs.
The biggest question for investors now: How confident are you in your ability to weather the financial effects of the coronavirus?
Due to the impact of the pandemic on Wall Street, it is natural for us to feel the trickle-down. Markets around the world are also in a bear, and many governments are considering providing stimulus or bailout packages to support businesses that are currently facing difficulty. Decentralized finance platforms may prove to be more resilient than traditional markets.
Addressing the market needs with Security Token Offerings (STOs) and STO exchanges
With the current market situation, decentralized finance platforms can give comfort to investors seeking more opportunities. These platforms allow holders of various tokens and cryptocurrencies to earn interest by lending to liquidity pools that provide loans to borrowers or borrow money by using their cryptocurrency or security tokens as collateral.
Decentralized platforms such as STO exchanges are becoming an extremely popular alternative to traditional markets because lenders can earn much higher returns compared to the interest that traditional banks pay–commonly around 5% to 13% depending on the platform and the tokens used. Additionally, borrowers can acquire against their own assets to bet for or against the market fluctuations that are an indication of cryptocurrency or token trading.
Just this first week of March, over US$1 billion was tied up in decentralized finance, a small amount compared to Wall Street standards, although growing steadily for an initial market that just started a couple of years ago. “Blockchain-based financial technologies have already disrupted the existing financial system as we know today,” Aaron Tsai, Founder and Chief Capitalist of MASEx and MAS Capital Inc., explained.
Decentralized finance innovates the financial market. “The use of the crypto token for the trading of securities is an innovative approach, which revolutionizes the industry, with the ease of token transfer globally, 24/7 trading of security tokens on exchanges and T+0 settlement or transfer of the security tokens,” Aaron added.
The “seismic shift” in the financial market
Most economic and market analysts cling to a worldview that puts the United States at the core of the global economy, with Asia–particularly China–on the perimeter. To simplify, the economic cycle begins in the West and is transmitted to countries on the perimeter through changes in interest rates, capital flows, trade, and investment. The United States and its traditional allies in Western Europe are the active members of this system while emerging markets on the outer edge play a role that is essentially passive and reactive. The rapid adoption of blockchain and AI technologies, together with the emergence of STO and STO exchanges, have disrupted the status quo.
Ostensibly, global economic activity was focused in the United States and Western Europe, with remote stations in Japan, South Korea, Taiwan, Hong Kong, and Singapore. But Asia’s economies, especially China, have grown much faster than their western counterparts, pulling the center of the financial gravity steadily deeper into the eastern hemisphere and toward Eurasia.
According to the International Air Transport Association (IATA), China’s share of the global economy has quadrupled to 16% in 2018 from 4% in 2002. The country’s share of global manufacturing has also quadrupled to 39% from 10%, while its share of global travel and tourism has surged to 18% from 5% over the same period.
“As China’s mobile Internet growth in the Web 2.0 era leap-frogged the U.S. in certain areas, such as mobile payment and multi-functional social media apps, such as WeChat. Technologies such as AI, Big Data, IoT, 5G and the Blockchain will continue to fuel growth, especially in the Greater Bay Area, due to the combination of IT technologies developed in Shenzhen together with financial related Blockchain applications developed in Hong Kong and Taiwan,” says Aaron Tsai.
This only shows that a “seismic shift” in the financial market is heading towards China and Asia, especially since bull markets heavily rely on certain countries or regions, like how Wall Street is heavily dependent on the American economy. With decentralized financial platforms, the need to depend on such economies is no longer necessary.
“Security tokens, which tokenize tangible and intangible assets such as corporate equity and debt, will revolutionize capital raising via Security Token Offering (STO). Investing in projects and secondary trading of security tokens will break-down the jurisdictional barrier on a global basis. The crypto tokens and security tokens will also integrate the unbanked into the global security token investment,” Aaron Tsai illustrated.
How MASEx is addressing the current market needs
MASEx has advanced cross-chain technology wherein tokens on different public chains can be traded, such as BTC with ETH, in a decentralized environment. With MASEx’s sidechain technology, BTC and ETH transfers can be completed at lightning speed. MASEx’s cross-chain wallet offers high-security features through a non-custodial design in which the user is in total control of their assets. The wallet also supports offline signatures for cold wallet capability–in effect ensuring an even higher level of security protection.
Not only that, but investors will also only need to open one MASEx account to trade any asset that has been tokenized by the issuer. The Universal Board on MASEx’s highest level of the stock board will enhance transparency with the introduction of a monthly reporting system, using a cloud-based internal control and accounting system. MASEx also plans to utilize AI to conduct continuous due diligence on companies, provide customer services in the near future.
A call for global standardization of STO regulations
These are critical for the capital markets, and decentralized platforms can be the solution. But to be able to move forward with this technology, regulations must be put in place. Not only it will establish an environment built upon trust, but it will also help prevent fraudulent activities.
“Regulatory compliances enhance the mainstream adoption of cryptocurrency and the use of crypto exchanges. The lack of regulation and compliance procedures is blocking the security tokens and security token exchanges, such as U.S. SEC’s reluctance to clear the Bitcoin ETF,” Aaron Tsai said.
This only means that as more countries adopt STO regulations, security token exchanges can help answer the ongoing volatility and liquidity of the market. This will also lead to better opportunities for both the investor and the company alike.