The announcement just fell, it is now possible to trade Tesla shares on Binance, the world’s largest cryptocurrency exchange. Stock tokens allow you to invest directly in a share with a cryptocurrency, all without commission and without having to leave the blockchain ecosystem. Another advantage: it is possible to buy fractions of shares, less expensive. All while keeping the right to dividends.
Although Binance is the leader in the field, the FTX and Bittrex platforms have been offering similar exchanges since October and December 2020, respectively. Binance’s entry into the field is likely to spread the practice on a larger scale. For now, Binance only offers Tesla’s action token and plans to announce more, but its competitors are already listing dozens.
The system is strongly reminiscent of that of online brokers like eToro or Robinhood, very popular in recent years due to the low (or absence) of commissions, the ease of use and the possibility for Europeans to invest on many exchanges like the American Nasdaq. Most of these platforms also offer the possibility of investing in the most famous cryptocurrencies. But the big difference between these online brokerage platforms and cryptocurrency exchange platforms is the use of blockchain.
According to the Binance statement, the action tokens tradable on the platform are not actually stocks, but tokens representing stocks: “Each action token on Binance will represent an equity action, which is fully guaranteed by shares stored in an underlying securities depository portfolio ”. This portfolio in which the “real” shares are located is managed by the same firms with which FTX and Bittrex collaborate: the German investment company CM-Equity AG and the Swiss Digital Assets AG which take care of “tokenizing” the shares. .
Thanks to this, it is possible to bridge the gap between traditional finance and cryptocurrencies, without having to convert virtual assets into fiat currencies like the euro or the dollar to buy stocks: “Stock tokens demonstrate how we can democratize value transfer more transparently, reduce friction and affordability costs, without compromising compliance or security. By connecting the traditional market to the cryptocurrency market, we are building another technological bridge for a more inclusive financial future, ”says Binance CEO Changpeng Zhao.
It should also be noted that on Binance, the shares will only be exchangeable against BUSD, a stable cryptocurrency modeled on the rate of the US dollar. In addition, tokens will be exchangeable only during Nasdaq opening hours.
This new feature is a major advance in the world of decentralized virtual assets and in the democratization of finance. A certain complementarity between cryptocurrencies and traditional finance is emerging. It is also not trivial to see the automaker Tesla listed first by Binance, while its founder, Elon Musk is a fervent defender of virtual currencies. The company recently invested $ 1.5 billion in Bitcoin and accepts payments in the currency.