Binance, the world’s largest cryptocurrency exchange, is launching tokenised equity trading for its clients, starting with an offering of Tesla shares.
The move will permit Binance’s clients to own US shares without having to cash in their crypto tokens and buy those shares through a traditional stockbroker.
Binance, which supports trading in more than 1,000 cryptoasset token pairs, says its mission is to be the infrastructure services provider for the blockchain ecosystem.
The exchange, which handles 1.4m transactions per second, was set up in 2017. It has so far managed to grow while skirting the regulations for traditional financial intermediaries.
Binance’s CEO, Changpeng Zhao, told Bloomberg recently that the exchange deliberately operates without a single corporate headquarters.
Binance has in the past been criticised for lax know-your-customer (‘KYC’) standards and for the indiscriminate listing of risky tokens from decentralised finance (‘DeFi’) projects.
Binance supports a growing share of the DeFi market through its ‘Smart Chain’ project.
The exchange is also reportedly under investigation from the US Commodity Futures Trading Commission (CFTC) for having permitted US residents to buy and sell derivatives without permission from the regulator.
Earlier today Binance said that it is launching zero-commission, tradable stock tokens, initially on US shares.
The tokens are backed by shares stored in a depository portfolio of underlying securities, in cooperation with Munich-based investment firm CM-Equity AG and Swiss-based asset tokenization platform Digital Assets AG, Binance said.
Trading in the stock tokens will take place in Binance’s native ‘stablecoin’ (BUSD), which is pegged to the US dollar and issued by New York-based Paxos Trust Co.
In a separate initiative, last week Paxos announced it had successfully trialled US equity trading with same-day settlement, a shorter cycle than the standard ‘T+2’ (settlement two days after trade date) currently used by most intermediaries.
Binance says holders of its new stock tokens will qualify for capital returns on the underlying equity, including potential dividends and stock splits, as they would from holding traditional shares.
“Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security,” said Changpeng Zhao.
Sign up here for the New Money Review newsletter
Click here for a full list of episodes of the New Money Review podcast: the future of money in 30 minutes
Related content from New Money Review
A new money infrastructure could end bank bailouts
