Binance is entering the tokenized stock trading space by enabling its users to trade tokenized Tesla stocks, the cryptocurrency exchange giant announced on Monday.
The exchange detailed that each stock token will represent a single unit of the company share. Binance will allow investors to trade fractions of the tokens, the minimum being a hundredth of the token, which will increase demand and liquidity.
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Though the crypto exchange only introduced Tesla, a company with a huge Bitcoin investment, initially, it has plans to add more stocks to its offering.
Binance is following the steps of its competitors like FTX and Bittrex Global to introduce such services with tokenized stocks. The move did not come as a surprise as the exchange’s Founder and CEO, Changpeng Zhao, earlier revealed his intentions to introduce such services.
The exchange has partnered with the German investment firm, CM-Equity AG, and Swiss asset tokenization platform, Digital Assets AG, to bring the tokenization services. Both these companies also serve Binance competitors.
Unlike FTX and Bittrex Global, Binance will allow the services only during the market hours, meaning traders can buy and sell Tesla stock within Nasdaq opening hours. The stock tokens will be priced and settled in BUSD, the exchange’s native USD-pegged stablecoin.
“Binance serves many users around the world, and we are very pleased to be able to help them participate in the equity market. Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security,” Zhao said in a statement.
“Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future.”