Binance today announced the launch of a tradable stock contract at zero commission fee allowing traders to trade fractionally tokenized versions of mainstream stocks on Binance, The first stock token would be of Elon Musk-led Tesla which would be paired, traded, and fractionalized in Binance USD (BUSD). The decision to include tokenized shares is to offer a wider portfolio to the existing customers allowing them to trade the traditional stock market without having to leave the platform they are using.
What are Stock Tokens Aka Tokenized Stocks?
Tokenized stocks are digital version of traditional stocks which can be traded anywhere and anytime across the globe. Tokenized stocks can be considered as a bridge between crypto and wall street whereby you can trade traditional stocks with your cryptocurrencies.
This tokenized stocks market is still in very nascent stage with FTX exchange being the largest player by daily trading volume. You can trade popular stocks like Tesla, Nvidia, Google, AMZN etc. on these exchanges which are open 24*7.
The major differences give tokenized stocks an edge as they require less regularity compliance are easy to trade. Here are few major advantages of tokenized stocks over traditional.
- Tokenized stocks can be traded 24*7 throughout the day, there is no opening or closing time unlike traditional stocks.
- Second key difference is fractionalization or divisibility, tokenized stocks allow you to own a fraction of a stock rather than a complete unit of stock. So, now you don’t have to buy a complete stock, you can buy portion of stock as per your affordability.
Top Exchanges to Trade Tokenized Stocks
Stock tokens are still a very early stage market and a few crypto exchanges have already taken a lead. At the time of reporting you can trade tokenized at three prominent crypto exchanges i.e. FTX exchange, Bittrex and Binance. Links are given in description below.
1. FTX Crypto Derivatives Exchange
FTX ranks 6th on CoinMarketCaps ranking of derivative exchanges with more than 120 token pairs. FTX was launched in Feb. 2019 and is known widely for its tokenized stocks. You can trade popular stocks like Amazon, Tesla, Netflix etc. at FTX in both future as well as spot markets.
2. Bittrex Cryptocurrency Exchange
Bittrex is among the oldest crypto exchange which recently made news for delisting privacy coins. Bittrex ranks at 13th in spot raking for exchanges at CoinMarketcap with more than 691 market pairs. You can trade popular tokenized stocks like Apple, Tesla, GME etc.
3. Binance Cryptocurrency Exchange
Binance doesn’t need any introduction and is currently the largest cryptocurrency exchange by volume. Currently, you can trade tesla and coinbase using stock tokens option at Binance.
The Binance Stock token service is being launched in association with CM-Equity AG, a licensed investment firm in Germany, and Swiss-based Digital Assets AG, an asset tokenization platform. The trading hours of Binance stock tokens would be similar to the traditional stock market.
Introducing tradable stock tokens on #Binance!
Trade digital tokens that represent fully backed shares of equity stock.
— Binance (@binance) April 12, 2021
Customers on the platform can start trading $TSLA stocks starting on 12th April where each tokenized share of TSLA would represent 1/100th of the actual market value of the stock. $TSLA is currently trading at $677.02, thus the $TSLA stock token would be valued at $6.77 a coin.
- Now Trade TSLA/BUSD And COIN/BUSD on Binance
The tokenized Tesla stocks would be available to trade against native stable coin BUSD and all the settlements would be done in the same token. traders can buy $TSLA tokenized stocks in BUSD and start trading on the exchange like any other digital asset. The exchange has also assured that other popular stock tokens would be added later based on the customer’s demand.
Binance CEO Changpeng Zhao suggested that the launch of the Binance stock token is a testimony of closing gap between the digital finance market and the traditional finance market. He explained,
“Binance serves many users around the world and we are very pleased to be able to help them participate in the equity market. Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future,”
Binance recently announced listing of Coinbase stock tokens as well just before the final bells of Coinbase IPO. The stock tokens can be traded with COIN/BUSD trading pair. It will be open for trading from Wednesday, April 14.
Prior to Binance FTX decentralized exchange had launched a similar stock token for Airbnb and many other traditional stocks that can be traded along with other digital assets. However, Binance being a market leader would ensure a larger market exposure for these tokenized assets.