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Why Crypto Exchange Binance Launches Tesla Stock Tokens

April 12, 2021 11:31 am
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Why Crypto Exchange Binance Launches Tesla Stock Tokens

Binance, the largest crypto exchange by volume, announced today that it is launching zero-commission tradeable Tesla Inc (NASDAQ:TSLA) stock tokens.

What Happened: Tesla stock tokens on Binance will have a minimum trade size of one-hundredth of a stock token, representing the same fraction of a Tesla share.

The tokens will be priced and settled in Binance USD (BUSD), a stablecoin pegged to the value of the U.S dollar issued by Paxos Trust Co.

Each whole token will represent one share of Tesla equity stock, which is fully backed by shares stores in a depository portfolio of underlying securities.

As per Binance’s announcement, the stock tokens were a result of its collaboration with investment firm CM-Equity AG and asset tokenization platform Digital Assets AG.

Why It Matters: “Now, you can access both cryptocurrency and traditional stock markets, all from the comfort of your Binance account,” said the crypto exchange in a blog, explaining that users were entitled to a range of benefits with this new offering.

Trading benefits included the added liquidity and access to traditional stock benefits like qualifying for capital returns on the underlying asset, including potential dividends and stock splits.

“We are making it possible for users to trade fractions of a unit of publicly tradable equities, turning them into more affordable units that have lower barriers of entry,” said Binance.

Binance isn’t the first crypto exchange to offer tokenized Tesla shares to its users.

Hong-Kong-based FTX launched tokenized equity trading in October 2020, after partnering with CM-Equity AG and Digital Assets AG.

In addition to tokenized Tesla shares, FTX also offers tokenized versions of Facebook, Inc (NASDAQ:FB), Netflix Inc (NASDAQ:NFLX), Amazon, Inc (NASDAQ:AMZN), Apple Inc (NASDAQ:AAPL), and Alphabet Inc (NASDAQ:GOOGL).

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