According to the company’s announcement, stock tokens will make it easier for Binance users to gain access to highly sought-after assets like stocks. Each stock token on Binance will represent one share of equity stock, which will be fully backed by shares stored in a depository portfolio of underlying securities. Investment firm CM-Equity AG and asset tokenization platform Digital Assets AG will act as custodians, the company said.
“This new kind of token combines different asset classes that are offered in one single marketplace for instant settlement in a compliant, scalable, and sound format,” said Michael Kott, the CEO of CM-Equity AG.
The first stock token to launch on Binance will be of Tesla, and will have a minimum trade size of one-hundredth of a stock token, representing the same fraction of a tesla share.
Stock token trading will follow traditional exchange hours, but despite the limitations of stock exchange closing times, the tokens will offer a slew of benefits to its users, Binance said. Holders of stock tokens will be able to qualify for capital returns on the underlying equity, including potential dividends and stock splits.
The new product also enables users to trade fractions of a unit of publicly tradable equities, lowering the barrier of entry for those looking to enter the traditional stock market.
Changpeng Zhao, the CEO of Binance, said stock tokens demonstrate Binance’s ability to democratize value transfer, reduce friction, and lower the cost of entry without compromising on compliance and security.
“Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future,” he said in the company’s announcement.