Binance, one of the world’s largest cryptocurrency exchanges, is considering reintroducing tokenized stock trading on its platform.
The company describes this step as a natural extension of its goal to strengthen the bridge between traditional finance (TradFi) and the crypto ecosystem.
Tokenized shares function as digital representations of publicly traded company shares. Instead of buying entire shares of companies like Apple or Microsoft, investors can invest in shares held on the blockchain that reflect the real-time price.
A Binance spokesperson stated, “Binance is committed to bridging traditional finance and crypto while maintaining the highest regulatory standards and expanding user options. We began supporting tokenized real-world assets over the past year and recently launched the first regulated TradFi perpetual contracts operating with stablecoins.” The spokesperson also argued that the exploration of tokenized shares is “the next natural step,” alongside partnerships with institutions and infrastructure investments.
This area is no stranger to Binance. The exchange launched its equity token service with Tesla in April 2021 and quickly expanded it to companies like Coinbase, Strategy, Microsoft, and Apple. However, the product came under scrutiny by regulators. The Financial Conduct Authority in the UK and BaFin in Germany questioned whether the tokens violated securities regulations. In July 2021, Binance shut down the service.
Despite this, interest in tokenized shares hasn’t waned. Rival exchange OKX has also announced it’s exploring this area. In the US, on the traditional finance front, the New York Stock Exchange and Nasdaq are seeking regulatory approval for equity token products. Binance’s other competitor, Coinbase, is also keeping plans to offer shares on-chain on its agenda.
On the other hand, legal uncertainties persist. Tokenized shares remain a contentious issue in the cryptocurrency market structure bills gaining momentum but remaining unresolved in the US Congress. Industry executives argue that regulations, as they currently stand, could slow the launch of these products. Coinbase CEO Brian Armstrong also publicly opposed the bill, calling for revisions that would allow the SEC to exempt some tokenized products from standard securities rules.
*This is not investment advice.