The world’s largest digital asset exchange, Binance, has just announced immediate support for tokenized shares on its platform.

Tokenized stocks are derivatives in the form of a digital token that are linked to an underlying asset, such as. For example, a publicly traded stock.  Simply put, you can now buy digital tokens representing shares in publicly traded companies through Binance.

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Binance has partnered with CM-Equity AG and Digital Assets AG to offer tokenized shares.  In this trio, working in tandem, there is a multi-step process in which,

1. Traditional shares are bought
2. The shares are transferred to the custodian
3. Digital tokens are created on a 1:1 basis for each share purchased.
4. Investors buy digital tokens

This process provides several benefits to the investor.  Here are some examples,

Fractalization

Investors are not obliged to buy the whole share, but only part of it if they wish.

Cost reduction

By buying token shares, investors avoid using a broker and save on commissions.

Geography

Since some stocks are only available on certain exchanges, they are often not available in certain parts of the world. Since Binance is a global exchange, it is now possible to hedge such shares on a larger scale.

To facilitate both the setting of prices and the settlement of stock exchange transactions involving tokens, BINSAINS naturally turned to its own office (BUSD).

Changpeng Zhao, CEO of Binance, explained the importance of token shares,

Binance serves many users around the world and we are very happy to help them participate in the stock market. The action markers show how we can more seamlessly democratize the transfer of value, reduce friction, and lower the cost of accessibility, without compromising compliance or security. By connecting traditional and crypto markets, we are building a new technology bridge to an inclusive financial future.

Although the token itself is not a security, Binance notes that these token shares will enjoy the benefits (dividends, return on equity, etc.) typically associated with such investments for investors.

Supported systems

Users of Binance’s services are generally forward-thinking individuals with a good understanding of disruptive technologies such as blockchain.  The actions that BINS intends to support on its platform are therefore considered to be in the interest of this group.  At launch, this support will be managed by none other than Tesla Inc.

Although Binance has only announced one action so far, other companies such as Apple, Amazon and others are expected to join them soon.

Binance will continue to respond to market demand by listing more exchange tokens and introducing other related features.

First to the table ?

While tokenized shares are not yet commonplace among popular platforms, Binance is far from the first to announce its support.  A few years ago, the now defunct DX.Exchange pioneered token shares through an exchange for digital assets.  The idea really took off in late 2020, when Bittrex Global announced its support for this unique offering.

Given that Bittrex Global has been offering this feature on its own platform for a few months now, it’s not surprising that the list of supported assets is much broader than Tesla’s.

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