Binance is launching fractional tokenized Tesla stocks to expand access to traditional assets without having to buy them in full.
April 12, 2021 | AtoZ Markets – Binance, one of the largest crypto exchanges in the world, is entering the tokenized stock trading space by enabling its users to trade tokenized Tesla stocks, according to an announcement on Monday 12.
The first publicly tradable stock in the form of a Binance stock token will be Tesla, currently priced at around $700. Instead of buying one in full, which requires custody of a physical stock certificate, users can buy as little as one cent of a Tesla share represented by a digital token. Binance stated:
“Each digital token represents a share and is fully backed by a custodian portfolio of underlying securities representing the tokens in circulation. Users will be able to exchange fractional tokens."
Thus, one cent of a stock token represents the same fraction of a Tesla stock, and the stock prices will be settled in Binance USD (BUSD), a stablecoin pegged to the US dollar and issued by Paxos Trust Company. Stock tokens are not convertible into shares .
The CEO of Binance, Changpeng Zhao, believes digital token stocks will provide a bridge between traditional and crypto markets, as well as broaden access to equity markets in a “more inclusive financial future."
Trading of digital token stocks will be commission-free, and the product was developed in collaboration with German regulated investment firm CM-Equity AG and Swiss asset tokenization platform Digital Assets AG. Participation in trading is not permitted in prohibited jurisdictions such as China, Turkey and the United States, and a Know Your Customer process must be completed in order to use this type of product.
According to the announcement released today, Binance's Q1 2021 was very positive, with 260% growth in trading volume and a 346% increase in user numbers. Meanwhile, the exchange's native token, Binance Coin (BNB), has risen more than 900% since the beginning of the year.
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