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Users can now trade tokenized stocks on the Binance platform

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on Apr 13, 2021
Updated: Jun 1, 2022
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  • The tokenized stock offers users with a low budget to buy Tesla stocks and gain dividends.
  • Binance will be starting the project with Tesla, but other companies and features will be added in future.
  • Binance will use a depository portfolio of the underlying securities, managed by a German firm.

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Cryptocurrency exchange Binance has announced it will enable tokenized stock trading service, allowing users to purchase fractions of companies’ shares. The exchange has already started with Tesla, as users can now but a fraction of the car maker’s shares.

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The new service offers zero-commission digital tokens, which are seen as real-life shares from the companies. It qualifies the holders to receive returns including dividends from the company. Binance says it is starting with Tesla, but other companies will be added in the future.

Users who are interested in the service are allowed to buy as little as one-hundredth of a Tesla share using Binance USD (BUSD).

Tokenized stock growing in adoption

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This is not the first time investors are allowed to buy tokenized stocks of a company. In December last year, Terra Lab’s Mirror Protocol was launched for tokenized stocks.

However, Mirror makes utilizes tokenized representations of actual equities, known as synthetic stocks. Binance on the other hand uses a depository portfolio of the underlying securities, which is controlled and managed by a German-based investment firm.

More features to be added in the future

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Binance also plans to add more features to the tokenized stocks in the future as shares of other companies are added to the list.

Fractional stocks are gradually gaining interest, particularly for those who are on a shoestring budget. It allows virtually everyone to trade on shares which would have been too high for them if they had to follow through the usual stock buying route.

A single share of Tesla is currently valued at $701. This may be out of reach for some individuals. But with the tokenized stock option, Binance users now have the opportunity of buying a fraction of the shares and entitled to an equal percentage of dividend.

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