Crypto exchange Binance has ventured into the space of tokenized stock trading, starting with Tesla

Through a partnership with German-based investment firm and Swiss Digital Assets AG, Binance will introduce the zero commission tradable stock tokens, starting with Tesla.

Crypto exchange Binance has ventured into the space of tokenized stock trading, starting with Tesla

Each new coin will represent one share of equity stock and will be fully backed by a depository portfolio of underlying securities. The first such token will be Tesla.

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.

Essentially, it means that the stock tokens represent economic ownership of the underlying equity asset but without having to hold custody of the physical share certificate. According to the statement, this option would lower expenses for investors and will enable them a greater financial participation.

Nevertheless, the stock tokens are not shares, but they will entitle the holders to gain exposure to the underlying assets. Unlike traditional equities, though, Binance’s new product can be fractionalized, allowing users to access the particular shares in more affordable units.

Binance CEO Changpeng Zhao (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. Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future.”

These stock tokens will be settled in BUSD (Binance USD-based stablecoin).

Tesla’s stock (TSLA) will be the first to be turned into tokens. Today, at 1:35 p.m. UTC, TSLA/BUSD trading will start. However, trading these tokens will be unavailable in China, Turkey, and other restricted regions. Those who are interested in trading will have to pass identity verification.

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