The Nairobi Securities Exchange (NSE) will not be a monopolist in offering trading of fractional securities in Kenya after the Capital Markets Authority (CMA) admitted a new firm that seeks to do the same thing.
The sector regulator on Thursday announced the admission of Yeshara Tokens into its regulatory sandbox, allowing it to test the tokenisation of real-world assets and securities, beginning with real estate.
Tokenisation is the digitisation of traditional assets like property, stocks, or government securities into virtual forms that can be broken down into smaller units and traded in fractions instead of as an entire unit.
Once an asset is represented by a token, it can quickly and cost-effectively be transferred, traded or used as collateral.
There are already two other companies testing the tokenisation of real-world assets in CMA’s sandbox, but Yeshara is set to be the first to extend the new technology beyond real estate into practically any perceivable asset.
“The company will test the trading of tokenized securities, focusing initially on real estate. This innovation is set to unlock liquidity and broaden access to financial markets,” the regulator said.
Yeshara founder Njoki Muthuuri told Business Daily that while the company is beginning with real estate tokenization, it will ultimately be tokenising all real-world assets, taking on the NSE which has similar plans for shares.
“We’re just starting off with real estate, but predominantly all our assets will be real-world based, and of course, the next one that we’d want to tokenise are the financial products such as the bonds and the bills,” she said.
Besides real estate and financial products, Yeshara is also looking at tokenising assets like public service vehicles and small businesses like shops, offering both a means for traders to crowdfund and a way for investors to diversify their portfolios.
John Mutuku, Yeshara co-founder, explained that ultimately, the platform will be an exchange, offering also a secondary market for trading the tokens.
This is also likely to increase the heat on the NSE, which hasn’t had a new listing since 2015 as smaller companies shy off.
Yeshara has the additional advantage of being completely virtual and never closes, unlike the physical bourse which closes on weekends and at night.
NSE had revealed intentions to start tokenising shares traded on the bourse by the end of last year, allowing investors to own a fraction of security if they don’t want or can’t afford to own it as a whole.
In October, the Nairobi bourse joined the Hedera Council – a global organisation that manages the Hedera Hashgraph decentralised ledger technology – with the intention of using the network for its tokenisation plans. It is, however, yet to launch any tokenised products.
The idea of tokenisation has been picking up pace across the globe.
There are already regulated exchanges that offer only tokenised real-world assets, mostly traditional securities digitised.
