Democratizing Access To Global Capital

Over the past month and a half, the Turkish Lira has experienced unprecedented volatility. As the currency hit rock bottom at 1 Lira to nearly 0.14 Euro, alarmed investors began withdrawing from the Turkish stock market. As market confidence plummeted, investment portfolios and company valuations sank. Stock market investors — many of whom are Turkish — were dealt a huge blow.

On the other side of the globe, Argentina has also been dealing with currency turmoil. Argentina’s peso lost 20% in value against the US dollar in a matter of two days at the end of August. Of course, this is nothing new for emerging markets, which often experience currency volatility. The situation is similar in other developing markets like Mexico, Brazil, South Africa and Romania.

While currency volatility is a natural constituent of a developing economy, it presents challenges to investors. Challenges are two-fold — local investors with a declining currency and foreign investors who understand the risks are much less likely to invest in emerging markets for fear of losing money. The consequence is that investment opportunities are few and far between and local businesses in these markets struggle to raise capital.

Technology allows us to cross physical and financial borders — why not apply technological progress to grant greater opportunity for investors who may only have access to local and unstable stock markets or have no affordable access to stock markets at all?

Historically, a combination of investor bias and practical challenges surrounding access to foreign markets contributed to investors’ struggle to tap into global capital. This is unfortunate, as foreign investment can greatly diversify portfolios and yield substantial returns.

The Problems DSTOQ Solves

Lack of stock exchanges in many countries
Volatile and inflationary local currencies
Cross-border investments are costly and inefficient

Although there is high middle class growth in emerging markets, there is still a lack of access to capital markets and financial infrastructure. DSTOQ will monetize on the massive untapped middle and upper class emerging markets where there is almost no competition.

(1) McKinsey, Deepening capital markets in emerging economics; World Bank SME Financing

Foreign and stable stock exchanges provide investors in countries with volatile currencies with more confidence when it comes to investing. However, at present, no stock exchange in the world allows customers to invest directly. Investors are forced to make trades through intermediaries such as banks or brokers. This results in a number of excess fees, resulting in very high overall costs.

For example, when interacting with an exchange, South African investors are charged monthly fees of up to $30, in addition to broker fees between 0.2% and 0.9% per trade. This is on top of a minimum charge of around $25 and foreign exchange fees of 2.5–5% for foreign investments. This means South Africans easily pay 5–10% in fees to invest abroad, especially when investing small amounts. Settlement times are typically between three to seven days depending on the speed of the investors’ bank. This example holds true in many other countries as well. Such problems prevent individuals from accumulating even modest wealth. And on the other hand, companies who lack access to capital markets do not have options for raising funds to grow or innovate.

With the use of the tremendous potential of blockchain technology, we can finally solve a real-world problem.

At DSTOQ, we believe that foreign exchanges should not be expensive nor difficult to access.

This is why we are building a peer-to-peer blockchain-based platform where investors and companies, regardless of where they are in the world*, can invest in and trade real-world assets like stocks and bonds, and raise capital through IPOs without the need for intermediaries. This is all possible with our tokenization process. Investors can purchase security tokens on our platform using cryptocurrency, which drastically reduces transactional and foreign exchange fees. Furthermore, by nature of being built on the Stellar blockchain, clearing times are between two to five seconds — 100,000 times faster than traditional exchanges. This is how we are democratizing access to capital.

By building a truly borderless stock exchange, DSTOQ is empowering investors around the world with access to stable and high-growth assets. Join us in making global capital accessible to anyone in the world.

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