If you have keenly followed the crypto and finance news that you certainly know about the new way of investment in shares – tokenized shares. The first tokenized shares have been issued in Seychelle by its national banks and from then on big players are replicating the trend.
Since October 2020, several platforms have embarked on the development of these new exchange systems which have met with dazzling success. Indeed, despite the health crisis and repeated confinements, crypto-finance is on the rise. On the contrary, at the heart of much-needed digitization, the financial markets are undergoing multiple changes and now offer even more opportunities to investors!
Still at the experimental stage, this new way of buying shares is not yet available in all countries. For example, subject to strict regulations, the United States does not yet benefit from this opportunity. Nevertheless, it seems that cryptocurrency stocks have a bright future ahead of them.
Contrary to what one might think, the moment is perfectly chosen to launch such an innovation. Indeed, in the midst of the turmoil, the global economy is struggling to regain its former energy and investors are taking the opportunity to look for other solutions. Thus, they opt for different asset classes, such as cryptocurrency, which currently represents one of the best insurances in the face of growing uncertainty.
What are tokenized shares
Tokenized shares is a form of security but different from traditional security as it is a digital token programmed using cryptography.
According to Binance’s press release, the stock tokens tradable on the platform are not actually stocks, but tokens representing stocks: “Each stock token on Binance will represent one stock of equity, which is fully secured by shares stored in a depository portfolio of underlying securities’ ‘. This portfolio in which the “real” shares are located is managed by the same firms with which FTX and Bittrex collaborate: the German investment company CM-Equity AG and the Swiss Digital Assets AG who take care of “tokenizing” the shares. .
Thanks to this, it is possible to bridge traditional finance and cryptocurrencies, without having to convert virtual assets into fiat currencies such as the euro or the dollar to buy shares: “The share tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and accessibility costs, without compromising compliance or security. By connecting the traditional market to the cryptocurrency market, we are building another technological bridge for a more inclusive financial future
This new feature is a major step forward in the world of decentralized virtual assets and in the democratization of finance. A certain complementarity between cryptocurrencies and traditional finance is emerging. It is also not insignificant to see the car manufacturer Tesla listed first Tesla Token on Binace (currently not available), while its founder, Elon Musk is a fervent defender of virtual currencies. The company recently invested $1.5 billion in Bitcoin and accepts payments in the currency.
Regarding the regulations, the SEC confirms that all tokenized securities need to be registered. Tokenized stocks that do not register their issuances will be regarded as illegal.