Binance Allows Users to Trade Tokenized Stock Tokens Starting With Tesla

Tesla image by Unsplash

On Monday, the Crypto exchange announced the launch of Binance Stock Tokens, zero-commission digital tokens which qualify holders for returns including dividends. users will be able to purchase as little as one-hundredth of a Tesla share, with prices settled in Binance USD (BUSD).

To begin with, Binance has listed Tesla stock tokens, meaning the exchange’s users can now buy Tesla tokens representing its shares. From 1.35 p.m. UTC April 12, users will be able to buy fractions of Tesla shares which trade at $677 a share at the time of writing.

“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.

Earlier this year he hinted the launch of tokenized stock trading service to the block with his statement: “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.

Binance will not be charging any commission on their part in terms of trading stock tokens, still there’s no finality about the service. The Block is still reaching out to Binance about this and they would surely let out a statement soon.

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.

a Binance spokesperson told The Block. FTX and Bittrex Global, on the other hand, offer 24/7 tokenized stock trading. Binance is still going to keep following the traditional market hours and when ask about this 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.

The exchange’s native crypto Binance Coin (BNB) has surged more than 25% in the last 24 hours, reaching an all-time high of $637.44. It is priced at $590.51 at press time. It’s not immediately clear what is driving the price of the coin.


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