Conclusive insights: The Global Digital Securities Ecosystem Study

Philipp Sandner
9 min readNov 15, 2019

The ecosystem surrounding digital securities is in its very early days and it’s evolving faster than ever before. The growth has led to an ever-increasing amount of companies starting work with the “next big thing in DLT”, a stellar development for the whole industry, yet the pace leads to a lot of intransparency within the different sectors. — Authors: Paul Claudius, Carl Bruns, Philipp Sandner

BlockState and Frankfurt School Blockchain Center tackled this intransparency and released the most comprehensive study about Security Tokens up to date. The research brought to light how Secondary Markets slow down the ecosystem, the way issuance providers struggle with disclosing information and the massive attention digital securities are already getting from traditional banks and investors alike. This post aims to inform you about both: The most interesting findings and our research process, starting off with the cornerstone of the ecosystem.

Infrastructure providers

Companies were identified as infrastructure providers if they offered a technological framework that allows 3rd parties to issue Security Tokens. They had to do this by offering their own token standard. This led us to a collection of 22 different projects.

Most remarkably we were able to find out that:

  • Every company except one offers an operational infrastructure
  • 11 companies come from the USA, 9 from Europe, 2 from Asia
  • Public and Private ledgers are both seeing application

Key findings

Infrastructure providers consist of many different kinds of projects. Well established ecosystem players like Ethereum are confronted with a variety of small companies, trying to fill out their own niche within the industry.

Verfication algorithms determine how the network makes sure that new data being added is correct and that existing data can’t be tempered with. Projects are using different approaches to solve different problems. Many companies are putting their trust into Proof of Stake instead of Proof of work, which is heavily favoured in traditional crypto projects. If you want to find out how the mechanisms work and how they differ from one-another, here’s an article that describes it in a simplistic manner.

Types of verification algorithms

Private solutions are on the rise in this category. As the demand from corporate clients increases the need for proprietary solutions increases with it, as this solution focuses on privacy and scalability.

Research process

Finding out that private protocols are on the rise came of no surprise to us. BlockState has worked with r3 corda, one of the leading forces behind private infrastructure frameworks, where we got to know the technology from up close and learned about its potential.

Due to the advanced state of this category the whole research went very straight-forward in general. Elaborate whitepapers enabled us to gather data in an aggregated, verfied manner, so we didn’t have to rely on secondary sources in general.

Issuance providers

Issuance providers were included as long as they offer or plan to offer a service to issue any type of asset in the form of a Security Token. This lead us to 53 different companies active in the space.

A few key-facts before we elaborate:

  • Issuance providers again predominantly come from the US (17 companies)
  • Lots of information is undisclosed
  • Ethereum is the most commonly used infrastructure

Key findings

When it comes to issuance providers, the leading indicator for a companies maturity in the ecosystem is the amount of STOs it executed or is planning to execute. Only the fewest companies we identified could offer a number higher than 5, most remained below.

How many companies executed which amount of STOs?

In line with our previous STO study Equity is being tokenised the most, followed by Real Estate. Debt and alternativeassets follow, further displaying the value Security Tokens are already adding to the traditional economy.

Research process

Researching issuance providers confronted us with several headache-inducing data points. Despite the amount of STOs and the raised volume both being fairly crucial to determine an issuance providers success, many of the companies we identified didn’t disclose anything. After digging through blog posts and social media and still not fining any definite results we decided to leave the data points unspecified for these cases. This is the reason why you can see quite a few “N/A”s in our table for this section.


We counted companies as investors as long as they invested into any given company of the ecosystem, so any company that we listed in our study. This added up to 69 investors in total.

What we found the most exciting:

  • The USA dominate this category like no other with 42 companies
  • 2nd place goes to German with just 6 investors
  • Investment firms tend to be smaller enterprises with max. 10 employees

Key findings

While doing our research the data fairly quickly showed one of the maybe more surprising results. Only 28% of investments made come from Blockchain-specific VCs. More than twice the amount, 64% of investments, come from traditional VCs. Security Token at least from an investors perspective seem to have gained mainstream traction.

Distribution of investors

Yet individual investment companies rarely invest in more than 1 Security Token related firm. Only 3 companies invested into 2 projects and even further just 2 times could we identify investors investing money into 3 businesses related to the ecosystem. So while investors represent a fairly large part of the ecosystem most of them are one-timers.

Research process

VCs and other investors never make it easy to find the actually interesting data. While we were able to easily identify all the relevant investors through the websites of the companies that were invested in, data like the amounts flowing into these companies are largely a well kept secret. In a few instances though we were able to find out more.

Secondary Markets

Secondary markets are trading platforms which enable the secure exchange of Security Tokens. We were able to identify 54 companies who offer or plan to offer this kind of service.

Most notably secondary markets are:

  • Largely not operational
  • Geographically spread out like no other category
  • Offering a wide range of additional services

Key findings

We identified secondary markets to be one of the key missing parts the ecosystem still has wot work on. 47 companies out of the 54 we identified are still working on their product. This is heavily influenced by the non-existent regulations regarding secondary trading of digital securities and the consequential prohibitions.

The markets concepts however still brought to light quite a few interesting pin-points. 89% of the trading solutions are going to target retail investors, equally opening up the markets to the masses as one could observe in the crypto ecosystem.

Target groups of secondary markets

Research process

Researching secondary markets, lead us to one of the main conclusions of this study: They have a long way to catch up. When going through the individual projects websites we approached it of the perspective of someone who actually wants to trade security token and tried to sign up for the service to gain access to a trading interface.

This led us to find many project who sort of claimed to be operational yet only offered demo trading or were still working on a functional version behind closed doors. Research was tedious but relatively conclusive, which enabled us to clear up any intransparency surrounding the secondary markets.


We included banks in our study when they executed any type of action that included security token activity. This means that a bank doesn’t necessarily has to offer token-related services in order to meet our criteria. In this way we were able to identify 17 different banks.

What we found the most interesting:

  • 24% of banks are still developing their services
  • Ethereum and r3 corda are used most frequently
  • Banks mostly tokenise debt

Key findings

Banks find themselves in a very diversified field of players:

  • State owned banks,
  • coporate banks,
  • investment banks,
  • and commercial banks

equally worked with the tech, using different features to their advantage.

Types of banks

The analysis of activities led to tokenisation being by far most popular executed action. A few banks offer issuance services, others have successfully tokenised securities to transfer them efficiently. Apart from that, Custody and Settlement services are being offered exclusively by corporate banks.

Research process

Luckily whenever banks interact with digital securities they usually do so with high amounts of money involved and news outlets always catch up on detailed information. This streamlined our research process a lot.

In the introduction we explained how we also included banks who only “interacted” with digital securities. We decided that this classification was needed as our research showed that some banks for example are limiting their activities to one-time transfers of digital securities. Activities like those do count as fairly important and are definitely related to digital securities, yet aren’t connected to any kind of offered service.


Our study gave an incredibly comprehensive overview over the ecosystem. Strengths and weaknesses became clearer than ever and the whole ecosystem will have to work towards its unanimous goal of increasing the traction further and further. By working together with the local governments, companies can work on a legal framework that establishes digital securities as a common good. Once the secondary markets can catch up and thus remove the bottleneck from the ecosystems lifecycle, the market has the potential to grow at an even more rapid pace than it already does.

Apart from the future, it’s great to see how far the ecosystem evolved already: 213 companies are shaping the industry as of today according to our research and more are definitely to come. Successes have been made, with regulators and traditional financial institutes alike. Security Tokens are here to stay and BlockState is ready to be a part of the journey.


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  • Blockchain knowledge: We wrote a Medium article on how to acquire the necessary blockchain knowledge within a workload of 10 working days.
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Our two books: the first one on blockchain and the society and the second one on blockchain and finance


Paul Claudius is a serial entrepreneur with 10+ years of experience scaling and selling disruptive businesses and category leaders across Europe. Digital securities have become his home ground at BlockState where he takes care of the company’s strategy and business development as CEO.

Carl Bruns has more than 10 years of operational experience founding, supporting and developing digital ventures in real estate, retail banking and publishing. After building the online marketing agency ABCD agency, he joined the Swiss security token provider BlockState as CMO, where he developed a deep understanding of the security token ecosystem.

Prof. Dr. Philipp Sandner has founded the Frankfurt School Blockchain Center (FSBC). In 2018 and in 2019, he was ranked as one of the “top 30” economists by the Frankfurter Allgemeine Zeitung (FAZ), a major newspaper in Germany. Further, he belonged to the “Top 40 under 40” — a ranking by the German business magazine Capital. Since 2017, he is member of the FinTech Council of the Federal Ministry of Finance in Germany. The expertise of Prof. Sandner includes blockchain technology in general, crypto assets such as Bitcoin and Ethereum, the digital programmable Euro, tokenization of assets and rights and digital identity. You can contact him via mail ( via LinkedIn or follow him on Twitter (@philippsandner).



Philipp Sandner

Professor | Lecturer | Author | Investor | Frankfurt School Blockchain Center