2020-10-31 17:31 |
Hong Kong-based crypto derivatives exchange FTX has launched regulated tokenized trading for US stocks. The exchange has teamed up with European financial companies Digital Assets AG and CM Equity AG to launch the new tokenized equities offering.
According to a report by Bloomberg, users will be able to access more than 12 stock and cryptocurrency pairings via FTX’s trading platform. This means that users can start trading shares of in-demand companies like Amazon, Tesla, Facebook, Apple, Netflix, as well as the S&P 500 against bitcoin and stablecoins.
One key advantage of this offering is that FTX will allow fractional ownership. Fractional ownership lets traders deposit smaller amounts. As such, they are able to speculate on high-priced stocks like Tesla and Amazon with way less capital.
Additionally, traders will not be required to pay for custody. FTX will only charge trading fees for the service. Notably, traders based in the United States and other jurisdictions restricted by the crypto exchange will not be able to trade the new product.
The CEO of FTX, Sam Bankman-Fried indicated that the offering is aiming at making it easier for investors to access stocks trading through traditional markets.
“For a lot of people, it’s a hassle to access stocks. There are ways to do it but they feel very much old and clunky. Giving people access broadens out what you can trade.”
The digitized and tokenized tokens will work like depositary receipts or ETFs. Traders will be able to trade them on the FTX platform, but they will have to cash them out through investment firm CM Equity which will hold the underlying securities.
While the fractional stocks offering offered by FTX carries some inherent risks, it is a tremendous step in bringing some legitimacy to the cryptocurrency industry.
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