Binance just launched tradeable stock tokens with Coinbase and Tesla stocks after it announced an expansion in investment offerings as we can see more in our latest Coinbase news.
According to Binance’s blog post, these tradable tokens will enable potential crypto investors to get more exposure to the traditional stock market which are zero-commission digital tokens that are fully backed and collateralized by a third party allowing the price to be pegged to the underlying shares price. The exchange noted:
“Stock tokens are tokens that closely track the performance of traditional financial securities, particularly shares of publicly traded companies. Stock tokens are delta-one products that are backed by physical shares. This means for a given instantaneous move in the price of the underlying asset there is expected to be an identical move in the price of the derivative.”
In order to facilitate storage and sales of stock tokens, Binance partnered with investment company CM-Equity AG and Swiss-based tokenization platform Digital Assets AG and now the potential investors in Binance’s stock tokens are eligible to receive dividends. With that being said, Binance’s current offerings are limited to Coinbase and Tesla stock tokens but neither of them pays out dividends.
Binance just launched the new options and with modern brokerages like Robinhood allowing the same fractional shares, equating a minimum investment of 1/100th per token. Coinbase and Tesla shares traded at $739 and $342 into Friday market close which means that the exchange users being able to invest as little as $7.4 or $3.4 in the respective companies. While there is a novelty in-stock token and poses no real benefit over traditional shares with Zero-commissions is nothing new in the brokerage industry and unlike crypto, the trading of stock tokens can occur during traditional market hours.
While it could be convenient for some to consolidate their crypto and equity investments into one platform with no clear incentive for now. With that being said, Aaron Gong, Binance’s VP of Futures revealing that the Tesla stock token recorded $10 million in the trading volume, demonstrating a clear demand from the users. How Binance’s latest rollout will be received remains to be seen.
As recently reported, Binance just burned over $594 million worth of its own BNB token in a move that marked the biggest burn in the exchange’s history. This wasn’t the case of the exchange trying to pump its own coin or setting money on fire but this mechanism is an integral part of how BNB works which contributed already to the coin becoming the third biggest cryptocurrency on the market.
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