Crypto exchange Binance has announced the launch of zero-fee traded exchange tokens.
Each share token will be worth one share. Each token is backed by a corresponding share in the depository portfolio of underlying securities. Binance is launching these tokens in partnership with investment firm CM-Equity AG and asset tokenization platform Digital Assets AG.
Tesla Stock Tokens
In the announcement, Binance announced that the first stock token they are offering is for Tesla Inc. In February, the company bought $ 1,5 billion worth of bitcoin (BTC). Since then, their shares have traded in the same way as bitcoins. Tesla CEO Elon Musk recently announced that the company now accepts BTC as payment for its cars.
Binance said that traders will be able to buy at least 1/100th of the exchange token, which is the same fraction of a Tesla stock. The world's largest crypto exchange also said it will value and settle exchange tokens in Binance USD (BUSD). BUSD is an exchange stablecoin pegged to the US dollar.
Traditional access to assets for crypto traders
According to the announcement, Binance has launched exchange-traded tokens to give its users access to more traditional markets. By using exchange tokens, Binance users will also be able to take advantage of a number of unique advantages that the exchange provides.
One of the advantages is the large amount of liquidity associated with trading volumes on the world's largest cryptocurrency exchange. The ability to trade fractional units of publicly traded stocks also lowers the barrier to entry for entry-level traders. Share token holders will also receive capital income on underlying shares such as dividends and share splits.
“Exchange tokens demonstrate how we can more seamlessly democratize value transfer, reduce complexity and affordability costs without compromising compliance or security,” said Changpeng Zhao, CEO of Binance.
Finally, the announcement noted that due to their internal linkages to the underlying stock, exchange tokens will have certain restrictions. For example, users can only trade exchange tokens, only during traditional exchange hours.
Traders will also have to pass the KYC requirement to trade exchange tokens.