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Binance, a prominent cryptocurrency exchange, has entered the tokenized stock market room. The exchange hopes that by offering this programme, it would pique the imagination of those who want to profit from capital gains on equities without having to buy a full share. Binance unveiled this new plan, revealing its first publicly tradable equity, which would be a Tesla stock token.
This will encourage people to own as little as one-hundredth of a Tesla share instead of purchasing the whole company. Binance claims that:
“Each digital token represents one share of equity stock and is fully backed by a depository portfolio of underlying securities that represents the outstanding tokens. Users will be able to trade fractional tokens.”
One Tesla stock token equals one share of the company, and one hundredth of a stock token equals the same fraction of a Tesla share. Binance USD [BUSD], Binance’s native stablecoin, would be used to settle the stock values. These stock tokens, however, cannot be exchanged for securities.
Binance has long considered launching a stock trading operation, and the exchange’s CEO, Changpeng Zhao, saw it as a bridge between the conventional and crypto markets. Zhao, also known as CZ, stated:
“Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security.”
Binance will continue to offer commission-free trading in digital securities. It was, however, not the only company in the area to provide this operation. Binance has entered the ranks of other well-known exchanges such as FTX and Bittrex Global, which have been offering tradable stock tokens since 2020.
Binance, like FTX and Bittrex, has collaborated on the service with the German financial company CM Equity AG and the Swiss tokenization firm Digital Assets AG. However, although the service was available globally, it was limited in China, Turkey, and the United States.