Binance launches tradable Tesla share tokens
Unlike traditional stocks, a stock token can be broken down into smaller and cheaper units. This means that more users can benefit from potential dividends.
The Binance cryptocurrency exchange launches tradable share tokens. This allows more people to get investment income from stocks, such as potential dividends, without buying whole, traditional stocks.
The first publicly tradable share in the form of a Binance share token will be Tesla. The share price of this is currently hovering around $ 700. Instead of an entire, traditional share that requires a physical share certificate, users can only purchase one-hundredth of a Tesla share, represented by a digital token. Binance stated:
“Each digital token represents a share and is fully secured by a portfolio of underlying securities that represent the token. This allows users to trade fractions of tokens.”
A hundredth of a share token corresponds to the same fraction of a Tesla share. The share prices are settled in Binance USD (BUSD). This is a stablecoin pegged to the US dollar and issued by the Paxos Trust Company. Stock tokens cannot be exchanged for stocks.
Binance CEO Changpeng Zhao believes that digital stock tokens form a bridge between traditional and crypto markets, making it easier to access stock markets. That leads to a “more inclusive financial future”.
Trading in the digital share tokens is commission-free. The product was developed together with the licensed German investment company CM-Equity AG and the Swiss tokenization platform Digital Assets AG. You cannot participate in the trade from some countries, such as China, Turkey, and the United States. You also have to pass an identity check in order to be allowed to be a trader for digital share tokens on the stock exchange.
The first quarter of 2021 was strong for Binance, according to an announcement made Monday. The trading volume rose by 260 percent and the number of users by 346 percent. Meanwhile, the exchange’s own token Binance Coin (BNB) so far this year by more than 900 percent gone up.