Popular cryptocurrency trading platform, Binance, has announced that it will list the tokenized shares of Apple, Microsoft, and MicroStrategy by the end of April. Users will get exposure to MicroStrategy as soon as today, while Apple and Microsoft stock tokens will be listed on the exchange on April 28 and April 30, respectively.
Binance started tokenized stock trading earlier this month, and it has resolved to remain top-notch. The exchange started with Tesla, Elon Musk’s e-car manufacturer, as the first company on its list. It has also added the fractional shares of rivaling cryptocurrency exchange, Coinbase, which went public on April 14. All tokenized stocks listed on Binance are denominated in the Binance USD (BUSD) stablecoin.
Although similar products are also offered by FTX, Binance offers commission-free stock trading. And all stock tokens are fully backed by a corresponding portfolio of underlying securities. Trading of stock tokens will follow traditional exchange hours but is not available for residents in Mainland China, Turkey, the United States, and other restricted jurisdictions as finally determined by CM-E. Interested traders will only trade stock tokens after satisfying the Know-Your-Customer policies and other relevant compliance requirements.
According to Binance, Stock Tokens are tokens of stocks (i.e., shares of public companies) that trade on traditional stock exchanges. Each stock token represents one ordinary share of the relevant stock. These stock tokens are fully backed by a depository portfolio of underlying securities held by CM-Equity AG, Germany (“CM-E”). Holders of Stock Tokens will qualify for economic returns on the underlying shares, including potential dividends. The exchange will monitor market demand and provide a channel for more Stock Tokens issued and sold by CM-E.
Binance and regulatory scrutiny
Binance has been under regulatory scrutiny over its new product that is supposed to democratize stock trading. On April 22, the Financial Times reported that the UK’s Financial Conduct Authority had started working with the exchange to determine whether or not the product falls within the country’s securities laws:
“We cannot comment on the specific case due to confidentiality obligations. Fundamentally, however, the following applies: if tokens are transferable, can be traded at a crypto exchange, and are equipped with economic entitlements like dividends or cash settlements, they represent securities and are subject to the obligation to publish a prospectus.”