Cryptocurrency exchange Binance announced its launch of tokenized stock trading for its customers in the United States, Mainland China, and Turkey.
The launch will start with electric car-maker Tesla’s stock tokens. The stablecoin pegged to the U.S. dollar and issued by the New York-based Paxos Trust Company Binance USD (BUSD) will price and settle the Tesla tokens.
Traders Can Buy up To 1/100th of Tesla’s Tokenized Stocks
The launch of Tesla’s tokenized stocks started when the NASDAQ opened on Monday. One tokenized stock will be equal to one share of the company. The stocks will be an upgrade from the traditional shares in the sense that they can be fractionalized into smaller and more affordable units. For instance, a single share of Tesla currently trades close to $700. However, with Binance’s stock tokens, customers can buy up to 1/100th of Tesla’s shares and begin investing with as little as $7.
Before investing in Tesla’s tokenized stocks, traders should be aware that they also come with their drawbacks. Unlike the traditional shareholders, token holders will not have liberties such as voting rights or the right to inspect corporate documents. Moreover, in the event of Tesla’s wrongful acts, token holders do not have the right to pursue legal action against the electric car-maker.
With all these considered, traders can take solace in the no-commission charged service and get on to investing. Token holders will earn returns and dividends, which they shall earn through Binance. The cryptocurrency exchange Binance’s CEO Changpeng Zhao described the launch as a way to increase accessibility to stocks by a seamless, frictionless, and reduced-cost service.
Binance is following in the Footsteps of FTX and Bittrex Global
Binance’s move follows cryptocurrency exchange and trading platforms FTX and Bittrex Global. Like its predecessors, Binance is partnering with German financial services provider CM Equity AG and Switzerland-based tokenization firm Digital Assets AG for the launch of this feature. However, Binance will be sticking to the traditional market hours for stock trading, unlike FTX and Bittrex Global who offer 24/7 tokenized stock trading.