Avalanche rises 10% after announcement of world's largest stock exchange

The price of Avalanche (AVAX) is suddenly rising sharply now that the largest stock exchange in the world is using the network for its new blockchain platform. This brings Avalanche a prestigious customer, although the network does not get the job done alone.

The New York Stock Exchange (NYSE) announced in a press release this afternoon that Avalanche will become the central ledger of its tokenized stock platform.

Tokenized shares are digital counterparts of ordinary shares on a blockchain. They can shake up the stock market considerably, because trading continues day and night, a purchase is immediately complete and investors anywhere in the world can already enter with small amounts.

Avalanche provides the technology to the clearing firm behind an alternative trading platform (ATS) affiliated with the NYSE. Such an ATS is a regulated trading venue next to the official stock exchange.

That clearing company arranges the settlement: the moment when money and shares really change hands. The shares themselves may be on other blockchains, while Avalanche records all transactions.

Dennis Lee, head of digital issuance at the NYSE, explains why the exchange is doing this. “At the NYSE, we look at how blockchain technology can expand our equity offering, and we choose the right technology for every job,” he said.

According to Lee, the exchange was looking for a general ledger that quickly processes transactions at predictable costs, and where the NYSE itself determines who is allowed to participate.

For Avalanche, the deal is a boost to his credibility. Still, it remains to be seen how much the network makes from it: the NYSE runs on a shielded version, and it is unclear how much of that usage results in demand for AVAX and transaction fees.

Nevertheless, the price has already risen by more than 10 percent today and AVAX is now one of the best performing cryptos of today in one fell swoop. Bitcoin (BTC), Ethereum (ETH), Ripple (XRP) and most other coins are suffering heavily.

The NYSE announced the platform on January 19, but is still awaiting regulatory approval. The matching of buyers and sellers continues to run on the exchange's own trading engine, after which the blockchain takes over.

You will soon be able to pay with stablecoins. This is necessary because regular dollar payments only run on working days, which means that direct settlement on weekends is otherwise not possible.

That the NYSE came out at Avalanche is no surprise. Charley Cooper, president of developer Ava Labs, said in September that the fair had been testing the technology for about a year.

Cooper didn't want to say whether Avalanche was elected at the time, but Michael Blaugrund, vice president at NYSE parent Intercontinental Exchange (ICE), was already clearly positive. “Avalanche ticks a lot of those boxes for us,” he said.

The NYSE is far from the only one that brings stocks to the blockchain. Rival Nasdaq is building its own system and is working with the parent company of crypto exchange Kraken.

The Depository Trust & Clearing Corporation (DTCC), the hub of US securities custody, also launched a tokenisation service at the end of last month. It focuses on the custody and transfer of securities, not on the trade itself.

Securities and Exchange Commission (SEC) came with an innovation exemption on 17 September. This allows approved platforms to trade tokenized shares for five years, unless the company behind the share objects.

And that is now happening on a large scale.

The OKXICE platform, a partnership between crypto exchange OKX and ICE, already had 59 objections at the beginning of November. Apple, Microsoft, Nvidia, Amazon and Tesla also don't want it.

Most companies give no reason. However, there is a fear that the token will deviate considerably from the real share at night and at the weekend, while the company itself has nothing to say about this.

Applied Optoelectronics, a maker of optical network components, also called the rules too new and doesn't want investors to think it supports the tokens.

The NYSE works differently. There, the company decides for itself whether its share will receive a token. It has that token made by the party that keeps track of all its shareholders. The NYSE is now working with six such parties.

In January, the NYSE wanted to start this year, although with about seven weeks to go, no start date is known.