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29 March 2024
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Binance cuts Tesla shares into tokens

The Binance exchange is embarking on trading fractions of shares, starting with stocks from Tesla. The same share can therefore be split into multiple tokens, facilitating access to certain securities.

At nearly $ 700, Tesla stock is not accessible to all retail investors. For Alphabet, the parent company of Google, the title even costs over $ 2,000. Digital finance can, however, contribute to greater liquidity in the equity market.

How? ‘Or’ What ? In particular by offering to acquire fractions of shares in the form of tokens. And Binance is counting on this new offering to further expand its customer base and trading volume.

Fractions of shares payable in Binance USD

But how does it work? In principle, a shareholder buys a full traditional share. With fractional securities, investors can this time buy one hundredth of a share. And that share will take the form of a digital token.

“Each digital token represents a share of capital and is fully backed by an underlying securities depository portfolio representing the tokens in circulation. Users will be able to trade fractions of tokens, ”Binance explains.

One hundredth of a share token thus corresponds to an equivalent fraction of a Tesla share. As for the price of these tokens, it is to be settled in Binance USD (BUSD), the exchange’s stablecoin. Its broadcast is made through Paxos.

Note that these share tokens are not exchangeable for shares. Finally, note that the first financial product of this kind therefore concerns Tesla. The title displays some volatility and its value is rising sharply.

Digital finance attacks stocks

But the automaker has also been a cryptocurrency player since 2020 with $ 1.5 billion in BTC capital. Tesla is only a first step though. ” Binance will continue to meet market demand by listing more stock tokens and features. ”

What benefit for investors beyond better accessibility? ” Holders of share tokens are entitled to an economic return on the underlying shares, including potential dividends. 

Binance is not, however, the first exchange to bring digital finance and traditional finance together. As of October 2020, FTX embarked on the tokenization of shares with stocks like Tesla, Apple and Amazon.

In Europe, Bitpanda also intends to diversify into this sector. His boss France told us that from April investors could invest in new digital financial assets, and in particular fractions of shares and ETFs.

News Source

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