21 Apr 2021 — Just last week, Crypto exchange Binance announced that users on their platform will be able to purchase tokenized Tesla stock. A few days later, they’ve added Coinbase, the largest US cryptocurrency exchange that was listed on Nasdaq on the same week.
MEANING? – The exchange’s users can now buy Tesla or Coinbase tokens representing its shares, respectively. While one stock token represents one share of the company, users are able to buy fractions of the token, with the minimum trade size being one-hundredth of the token.
ADVANTAGE – This fractionalisation of stock tokens, much like a blockchain version of a ”stock-split” makes high-priced stocks much more affordable investors. This translates to around USD7.19 for Tesla and USD 3.21 for Coinbase (as of price on 21 Apr, 10.37am SGT).
ARE YOU KIDDING? – Although tokenized stocks can be traded 24/7 throughout the day, Binance is not taking its full advantage as their service follows traditional market hours. Binance response was that stock tokens are fully-backed, and the trades are executed in real-time. Hence, trading of stock tokens follows the underlying stocks’ traditional trading hours. FTX: Cryptocurrency Derivatives Exchange and Bittrex Global, on the other hand, offer 24/7 tokenized stock trading.