Binance Begins Tokenized Stock Trading

Leading crypto exchange Binance announced on Monday that it will expand its product offering by adding fully-backed digital tokens representing equity stocks.

To begin with, Binance has listed Tesla stock tokens, meaning the exchange's users can now buy Tesla tokens representing its shares. Starting from 2:35 pm today, users will be able to trade tokens of the electric carmaker's stocks.

The move was made possible by a partnership with German-based investment firm CM-Equity AG, and Switzerland’s Digital Assets AG.

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Being fully backed by a depository portfolio of underlying securities representing the outstanding asset, the Binance Stock Tokens will enable holders to qualify for economic returns on the underlying shares, including potential dividends. Users can own fractions of these tokens as low as one-hundredth of a stock since stocks like Tesla are relatively expensive.

"Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security," said Binance CEO Changpeng Zhao. “Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future.”

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Binance's stock tokens are priced and settled in BUSD, meaning users can buy and redeem these tokens via the exchange's stablecoin, issued by Paxos. FTX's stock tokens, on the other hand, are quoted in "USD stablecoin," meaning users can buy and redeem in a range of options, including the U.S. dollar, as well as USDC, BUSD, HUSD, and PAX Standard stablecoins.

Although the crypto community often touts that its markets are always open, the Tesla stock tokens will only be available when the Nasdaq is open.

There’s one other drawback. Token holders aren’t granted the same rights as shareholders, like voting power, inspecting corporate documents or suing for wrongful acts.