The world’s dominant cryptocurrency exchange, Binance, is venturing into stocks with the listing of three more stock tokens from tech and investment giants.
In an announcement on April 26, Binance stated that it would be listing MicroStrategy (MSTR), Microsoft (MSFT), and Apple (AAPL). The MSTR/BUSD pair will be listed on April 26. The other two, also tradable in Binance’s own stablecoin, will launch on April 28 and 30.
Binance already has two stock token pairs listed for Coinbase (COIN/BUSD), and Tesla (TSLA/BUSD). It explains that stock tokens represent one ordinary share of the relevant stock. Holders will qualify for economic returns on the underlying shares, including potential dividends.
They are fully backed by a depository portfolio of underlying securities held by CM-Equity AG, Germany (“CM-E”), it added. Binance stated that trading will follow traditional market hours. They aren’t available for residents in Mainland China, Turkey, or the United States.
Stock tokens are collateralized and cash-settled in BUSD, meaning there will be no physical redemption of underlying shares.
The rise of synthetic stocks
One of the major advantages to stock tokens is that traders can buy fractions of shares. For example, a quarter of a Tesla share at $243, instead of a full share at the current price of $730.
They are also available to geographical areas and countries that would not be able to access traditional stock markets due to restrictions and regulations. However, there are still KYC requirements to go through. Binance users must have completed Level 2 KYC, including ID and face verification, to trade them.
Binance is not the only exchange to offer stock tokens, otherwise known as synthetics. The Synthetix DeFi protocol also has a wide range of them. They also allow users to create their own, providing they deposit the collateral in SNX tokens or ETH.
On April 23, derivatives trading protocol Kwenta, powered by Synthetix, announced the listing of various synthetic stock tokens from the top five tech firms known by the acronym FAANG — Facebook, Apple, Amazon, Netflix, and Google.
The Mirror DeFi protocol, which runs on the Terra blockchain, has a similar range of synthetic tokens. These are based on tech stocks, as well as a FAANG index token.
BNB price update
At the time of writing, Binance’s native Binance Coin (BNB) was trading up 9.3% on the day according to CoinGecko. BNB was changing hands for $533, after having dumped to a weekend low of $480.
The exchange-based crypto asset has doubled in price over the last 30 days. Yield farming incentives on the PancakeSwap DEX have been the primary driver.