Binance, a leading cryptocurrency exchange, has officially announced the launch of its zero-commission, tradable stock tokens. The new service enables Binance users to trade fractional stocks through denominated, settled, and collateralized tokens.
By tokenizing stocks, the calculation of returns becomes easier and quicker in fiat, given that the trading pairs are based on stablecoins. The service provides Binance users who wish to diversify their investment portfolio from crypto and spread over into traditional financial markets. This follows what FTX and Bittrex Global have previously done, and provides users with exposure to traditional equity markets. Stock tokenization provides flexibility and market access to users who may not be able to afford the purchase of fully paid-up shares, a barrier of entry to traditional exchanges.
The exchange highlighted Tesla Inc. (TSLA) as the first Binance Stock Token to be listed. The trading pair for TSLA/BUSD is set to open today at 1:35PM UTC through Binance’s web app. The announcement has not detailed if this will soon be available through the Binance mobile app. The service was launched in partnership with German financial firm CM Equity AG, a licensed and fully regulated asset management firm, and Switzerland-based tokenization firm Digital Assets AG.
According to the announcement, Binance Stock Tokens (BST) are “zero-commission digital tokens fully backed by a depository portfolio of underlying securities.” These tokens, in turn, represent the outstanding tokens. Users who have a certain amount of stock tokens held in their wallet qualify for returns on the underlying shares, which includes potential dividends and stock splits.
"Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security," shared Binance CEO Changpeng Zhao.
Binance has stated that while it initiated the launch of this service with TSLA, it will continue to list more stock tokens and features further down the development roadmap, in response to market demand. Given how these stock tokens are based on traditional stocks, the exchange will offer the stock tokens only on the same hours as traditional exchanges, based on which market the stock is offered. In the case of TSLA, Nasdaq market hours will be followed.
Binance further notes that the stock tokens are unavailable for residents in the U.S., Mainland China, Turkey, as well as other economic jurisdictions with crypto and stock trading restrictions in place. Traders who would wish to participate as the tokenized stock offering opens today are required to comply with Binance’s KYC (Know-Your-Customer) process (Level 2) and submit further legal requirements for verification.
Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.