Cryptocurrency exchange Binance announced through a statement that it will allow its users to buy fractions of company shares with a new tokenized share trading service. Starting with Tesla.
The first publicly tradable share in the form of a tokenized share of Binance will be Tesla, which is currently priced at around $ 700. Rather than buying a full and traditional share, for which custody of a physical share certificate is required. Users can buy as little as one hundredth of a Tesla share represented by a digital token. Binance stated:
«Each digital token represents one equity share, and is fully backed by a portfolio of underlying securities that represents the tokens in circulation. Users will be able to trade fractional tokens».
One hundredth of a tokenized share therefore represents the same fraction of a Tesla share, and the share prices will settle in Binance USD (BUSD), a stablecoin pegged to the US dollar. Tokenized shares are not exchangeable for shares.
The exchange’s CEO, Changpeng Zhao, believes that digital tokenized stocks will provide a bridge between traditional and cryptocurrency markets and expand access to equity markets. Which will lead to a “more inclusive financial future.”
Tokenized Tesla shares had been suggested by Binance CEO earlier in the year
The CEO of Binance had suggested that it would be a good idea to launch stocks early in the year. Advancing at that time that they were evaluating the product.
Platforms such as FTX and Bittrex Global already have similar services for trading tokenized shares of the stock market. Also the cryptocurrency exchange Uphold launched last year the trading of shares and fractions of shares, including Tesla, Google, Amazon and others.
Binance’s new service for trading tokenized shares will follow Nasdaq’s market hours. The reason for following traditional market hours is because transactions are executed in real time. Therefore, stock token trading follows the traditional trading hours of the underlying stocks.
Notably, tokenized stock trading is not available to residents of the United States, Turkey, China, and other restricted jurisdictions, and KYC measures apply for traders.
Tesla’s tokenized shares are the first to be available for trading on Binance. But it is expected that in the future, other equity-backed tokens will start to appear based on user demand.
How about Binance launching tokenized stocks? Let me know in the comment box.