Tokenized stocks

Binance , BitPanda , Mirror , FTX crypto giants are launching a new product , tokenized stocks.

What the hell is tokenized stock ?

When we talk about tokenized stocks, there are two kinds those with and without collateral behind it. The first one looks a lot similar to traditional stock , the only difference is that they are traded on a blockchain and not on an opaque internal system. I think that we see the boundary of the current system during the meme stock mania with the robinhood / citadel drama.

The tokenized stocks without collateral are very close to CFD , except that we can imagine a future where you will be able to transfer your tokenized stocks easily. For now we have far less leveraged on tokenized stocks that what we could find on CFD.

The Ability to Trade 24/7 Those Stocks

One of the main benefits from tokenized stocks , it’s the ability to trade 24/7. On traditional markets there are opening and closing hours , on crypto market they are always open. With tokenized stock that’s the same , you will always be able to sell your stock. The only difference is the liquidity when you buy or sell a stock you need a counterpart that agrees to do the reverse operation. With pool of liquidity that’s a little bit different . However the endgame could be the same if you bought or sell a volume too important , you will have a big premium to pay.

At the beginning that offers arbitrage opportunity because there isn’t a lot of volume so we can see lag between legacy market and tokenized stock.

Also the trading 24/7 could give an edge for the individual investor on the institutional investor that will not trade the weekend.

The ability to access from anywhere in the world

There are still a lot of countries that can’t have access to the US stock market or with really high fees. With tokenized stock and stable coin that will not be the case anymore. Anyone with an internet connection and a little bit of money ( fractional shares) would be able to invest in the biggest company Apple , Tesla , etc.

In the short term, I think that will hurt traditional finance because after hours are expensive for the customers . Also generally foreign brokers charged big fees to invest on the US stock market or foreign exchange. .

On a long-term perspective, they have a good chance to replace after hours trading but probably not trading intra-day because of the volume issue. They will push the price down of new brokers to access foreign exchanges. And they will disrupt the CFD industry , because the CFD are not transferable toward other exchanges.

We could even see a future where your bank account will be a broker account , with 0 interest , we can imagine that you take margin with collateral the biggest company amazon , apple etc. Bit panda now offers a crypto card that permits you to spend the money on your account. Especially if you live in a country without a stable currency , using amazon stock has a bank account could be a good option.

However we are just at the beginning of the adventure : not decentralized protocol yet. Like we still depends on company as CM — equity , Digital assets AG to buy the stocks and centralized exchange as binance and ftx to tokenized them.

The others huge issue is that few stocks are tokenized but with more people interest in investing in tokenized stock , more stock will become available.

The last opportunity is a lack of fiscal awareness on that side , which offers fiscal opportunity like differentiation between taxation on stocks and on crypto assets. You could play on that to increase your return.

I’m not a financial advisor and everything I share in that article are just my personal view .