Leading crypto exchange Binance will expand its product offering by adding fully-backed digital tokens representing equity stocks.
By partnering with a German-based investment firm and Switzerland’s Digital Assets AG, Binance will introduce zero commission tradable stock tokens. 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.
Binance Launches Commission-Free Tradable Stock Tokens
The leading digital asset exchange, Binance, announced its latest development in a press release shared with CryptoPotato. The innovation will be possible by collaborating with the tokenization platform Digital Assets AG and the German licensed investment company CM-Equity AG.
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.”
“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.” – commented Binance CEO Changpeng Zhao (CZ).
Starting With Tesla
The release also outlined Tesla as the first stock token to see the light of day on Binance. The minimum trade size is one-hundredth of a stock token, representing the same fraction of a Tesla share.
All tokens will be priced and settled in the exchange’s native stablecoin – Binance USD (BUSD). It’s a regulated stablecoin pegged to the US dollar and issued by Paxos Trust Company.
Starting with Tesla is somewhat expected as the electric vehicle giant is among the most pro-crypto publicly traded companies recently. Elon Musk’s brainchild purchased $1.5 billion of bitcoin in January this year and enabled BTC purchases for its cars in March.