Trade Stock Tokens on Binance

Today, we are launching zero-commission, tradable stock tokens. Now, you can access both cryptocurrency and traditional stock markets, all from the comfort of your Binance account. Each stock token on Binance will represent one share of equity stock, which is fully backed by shares stored in a depository portfolio of underlying securities, in cooperation with investment firm CM-Equity AG and asset tokenization platform Digital Assets AG.

The first stock tokens on Binance will be of Tesla Inc., the largest automaker by market capitalization. Tesla stock tokens on Binance will have a minimum trade size of one-hundredth of a stock token, representing the same fraction of a Tesla share. Stock tokens are priced and settled in Binance USD (BUSD), a regulated stablecoin pegged to the U.S. dollar and issued by Paxos Trust Co.

How Stock Tokens Open Up More Markets For Our Users

Stock tokens make it easier for Binance users* to gain access to highly sought-after assets like stocks. We offer these unique advantages to traders, such as:

* Liquidity. Adding stock tokens to Binance makes it possible for investors to trade both crypto and traditional assets, straight from the world’s biggest crypto exchange by trading volume.

* Flexibility. We are making it possible for users to trade fractions of a unit of publicly tradable equities, turning them into more affordable units that have lower barriers of entry.

* Access to Traditional Stock Benefits. Holders of stock tokens qualify for capital returns on the underlying equity, including potential dividends and stock splits, as they would from holding traditional shares.

* Access to our Crypto Financial Suite. Aside from trading benefits, we also offer a wide-ranging suite of crypto financial services that augment your trading experience, from loans and savings products to liquidity pools and token launch platforms.

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

During the first quarter of 2021, Binance recorded a 346% growth in users, fueling a 260% growth in total trading volumes. As the total market value of cryptocurrencies shoots past $2 trillion, indicating accelerated crypto adoption, the launch of stock tokens opens up another avenue of growth for both Binance and its users.

Possibilities from Within and Outside of Crypto

Our launch of stock tokens opens up new opportunities for both crypto and traditional investors. Binance users who are knowledgeable about crypto’s fractional properties can now diversify into equity assets using a digital currency and platform they are familiar with. Meanwhile, conventional investors can access equities in smaller quantities and gain exposure to the fast-growing crypto market through the largest and most liquid digital asset exchange in the world.

The launch of Binance stock tokens is made possible through our collaboration with CM-Equity AG, a licensed investment firm in Germany, and Swiss-based Digital Assets AG, an asset tokenization platform.

“We are a team of people-focused entrepreneurs, capital market specialists, software engineers, and financial regulatory experts. Our combined expertise is behind the launch of our stock tokens. CM-Equity AG and Digital Assets AG, as the engineers of the product, are pleased to pioneer an innovative experience on the Binance platform. This new kind of token combines different asset classes that are offered in one single marketplace for instant settlement in a compliant, scalable, and sound format.” said Michael Kott, CEO of CM-Equity AG.

Binance will continue to respond to market demand by listing more stock tokens and launching more related features.

* Trading of stock tokens will follow traditional exchange hours. Stock tokens are not available to residents in mainland China, Turkey, and other restricted jurisdictions. Interested traders will be required to pass Know-Your-Customer and other relevant compliance measures.

 

 

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Binance launches tokenized stock trading, starts with Tesla

Quick Take

  • Crypto exchange Binance has ventured into the space of tokenized stock trading, starting with Tesla.
  • That means users can now buy fractions of the Tesla stock token on Binance.

Crypto exchange Binance has ventured into the space of tokenized stock trading, following the likes of FTX and Bittrex Global.

To begin with, Binance has listed Tesla stock tokens, meaning the exchange’s users can now buy Tesla tokens representing its shares.

One Tesla stock token represents one share of the company. Users, however, can buy fractions of the token, with the minimum trade size being one-hundredth of the token.

The fractionalization of stock tokens makes them more affordable. One Tesla stock, for instance, is currently priced at around $700, which is quite expensive.

“Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security,” said Binance CEO Changpeng Zhao.

Zhao first hinted at the launch of tokenized stock trading service earlier this year. He told The Block at the time: “We’re definitely looking at it.”

“We do try to copy innovation when innovation is good,” Zhao said at the time, referring to FTX’s similar service.

Like FTX and Bittrex Global, Binance has also partnered with German financial firm CM Equity AG and Switzerland-based tokenization firm Digital Assets AG for the service.

‘Commission-free’

Binance is not charging any commission for trading stock tokens. It is not clear what the exchange’s business model is around the service. The Block has reached out to Binance and will update this story if we learn more.

FTX charges the same commission for their service as for all its other markets, i.e., 2-7 basis points depending upon trading volumes, CEO Sam Bankman-Fried told The Block.

“We also let any third parties, who have KYCed with us and CM-Equity AG, create/redeem/provide liquidity,” said Bankman-Fried.

While Binance is advertising its service as “commission-free, the exchange could be charging a spread to create/redeem, according to Bankman-Fried. “Binance’s desk could be the only market maker,” Bankman-Fried told The Block.

Binance’s service follows traditional market hours. Tesla’s stock token, for instance, will follow Nasdaq market hours, a Binance spokesperson told The Block. FTX and Bittrex Global, on the other hand, offer 24/7 tokenized stock trading.

When asked why to follow traditional market hours, the Binance spokesperson told The Block: “Stock tokens are fully-backed, and the trades are executed in real-time. Hence, trading of stock tokens follows the underlying stocks’ traditional trading hours.”

“Each token is fully backed by a depository portfolio of underlying securities that represents the outstanding tokens,” said the spokesperson. “Our partner CM-Equity AG, a licensed and fully regulated asset management firm in Germany, entrusts the acquired shares to a third-party brokerage firm for custody. In addition, CM-Equity AG will be monitoring all trading activity for compliance.”

Binance’s service isn’t 24/7, maybe because their internal trading desk doesn’t know how to price it outside of liquid market hours, Bankman-Fried told The Block.

Binance’s stock tokens are priced and settled in BUSD, meaning users can buy and redeem these tokens via the exchange’s stablecoin, issued by Paxos. FTX’s stock tokens, on the other hand, are quoted in “USD stablecoin,” meaning users can buy and redeem in a range of options, including the U.S. dollar, as well as USDC, BUSD, HUSD, and PAX Standard stablecoins.

It is worth noting that stock tokens are not shares, but they only give exposure to underlying shares and potential corporate actions, including dividends and stock splits.

Binance said it would list more stock tokens in the future based on market demand.

To get started with the stock tokens service, Binance users will have to go through know-your-customer (KYC) measures, including submitting identity documents and completing facial recognition verification.

Additional KYC measures, including proof of address, will be required for German residents. Meanwhile, the service is not available to residents of the U.S., mainland China, Turkey, and other restricted jurisdictions.


Update: This story has been updated to include comments from FTX CEO Sam Bankman-Fried.

© 2021 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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