Binance has announced the launch of new stock tokens that can be traded with zero fees.
The launch took place today, Monday, April 12th, 2021, with the token for the Tesla stock.
These Binance Stock Tokens allow users to trade fractional shares, and are denominated, settled and secured in BUSD, which is Binance’s stablecoin pegged to the value of the US dollar.
The first Binance Stock Token to be listed was Tesla Inc. (TSLA), with trading on the TSLA/BUSD exchange pair starting at 1:35 PM (UTC). This will allow exchange users to trade fractions of Tesla shares on the same Binance website.
However, trading of equity tokens will follow the trading hours of traditional exchanges, and is not available to residents of certain restricted jurisdictions. In addition, users will have to pass KYC procedures, and any other relevant compliance measures, in order to access the service.
Binance Stock Tokens are digital tokens that are fully supported by the underlying securities representing the tokens issued. Therefore, holders of these tokens also qualify for the economic returns of the underlying stocks, including potential dividends.
The aim is to democratize access to traditional capital markets as well as cryptocurrency markets.
Binance stock tokens
Traditionally it can be expensive to trade stocks, and in some jurisdictions it can also be difficult to access brokerage accounts. In contrast, Binance Stock Tokens allow for greater financial participation due in part to the fact that they break down a highly sought after and regulated asset class into more accessible units.
This way crypto users who are already familiar with fractional units of cryptocurrencies can diversify into equity assets using a digital currency and platform they are familiar with. Conversely, for conventional investors, there is the opportunity to access smaller amounts of stocks while also gaining exposure to the cryptocurrency market.
Binance Stock Tokens are fully backed by the underlying market so that holders can enjoy certain shareholder benefits. For example, they will be entitled to receive any dividends, which will be credited directly to the user’s account, and they will also be able to take advantage of support for other company actions, such as stock splits.
However, these tokens do not confer any legal rights, so its holders have no legal or voting rights, and cannot participate in the company’s AGM.