A new report by Australian Financial Review confirms that local lending startup, Marketlend will this week begin trial for a new digital currency that would allow holders to buy tokens representing ownership in loans issued on their platform.
Per the update, Marketlend, which has issued over $150 million worth of loans since 2014, has partnered Polymath to launch a digital currency called Black, with the ultimate goal of increasing the liquidity pool for loan issuers.
Black, as it stands, would be backed one to one with Australian dollars held in a trust by Marketlend, while investors can buy it to access security tokens, which represent their ownership or interest in loan deals.
For a start, 26 investors would be given access to digital wallets containing Black, which they can use to purchase loan securitized tokens offered on Marketlend or any other approved security token exchange platform. The new services reportedly provide an exit outlet that didn't exist until now for investors.
Commenting on the development, Polymath understandably described the latest move by Marketlend as the first example of how to use blockchain to introduce liquidity in a private secondary loan market.
Marketlend CEO, Leo Tyndall also agreed, providing further insights into how the soon to be trialed digital currency and security token would work. He noted that structure was created in line with laws guidance stipulated for Australian Financial Services Licence (AFSL) holders like Marketlend, and is available only to accredited or wholesale investors.
Meanwhile, Graeme Moore, head of tokenization at Polymath on his part, detailed why startups are leading the charge to tokenize loans and investments when some would have expected more giant corporations to do so.
Moore reportedly said:
Given the size of the markets they operate in, the big investment banks won't be the leaders with rolling this out, but they will closely watch innovation in start-ups, and if these small market use-cases prove themselves, then I expect significant scaling up worldwide.'
In another update about asset tokenization, Stmarket.co reported last week that Huobi Japan plans to venture into tokenized securities with a new $4.6 million equity funding from Financial Products Group (FPG).