Exchange plans to bring back tokenized stock trading after 2021 retreat

Binance is considering bringing back tokenized stock trading on its platform, after abandoning the product in 2021.

Stock tokens are digital representations of shares in public companies. Instead of owning a whole share of Apple or Microsoft, an investor can buy a fraction of a share — held and settled on a blockchain — mirroring the real-time price of the underlying asset.

“Binance is committed to bridging traditional finance and crypto, expanding user choices while maintaining the highest regulatory standards. Since last year, we started supporting tokenized real-world assets, and we recently launched the first regulated TradFi perpetual contracts settled in stablecoin,” a Binance spokesperson told CoinDesk.

“Exploring the potential to offer tokenized equities is a natural next step in our mission to bring TradFi and crypto closer together as we continue to actively build infrastructure, partner with traditional institutions, and develop innovative solutions for our users and the industry,” the spokesperson added.

A tokenization shift

This isn’t the first time Binance has done this.

The exchange first launched its stock token service in April 2021, starting with Tesla and quickly expanding to Coinbase, Strategy, Microsoft and Apple. The move attracted scrutiny from regulators, with both the U.K.’s Financial Conduct Authority and Germany’s BaFin questioning whether the tokens violated securities laws. By July of that year, Binance shut down the offering.

But interest in tokenized stocks hasn’t faded.

OKX, another major crypto exchange, is also looking into the space, its global managing partner Haider Rafique told The Information. And in the U.S., traditional financial players are trying to get in too, with both the New York Stock Exchange and Nasdaq seeking regulatory approval to launch stock token products. Meanwhile, Binance’s peer, Coinbase, is also looking to offer stocks onchain.

Still, legal barriers remain.

Stock tokens were one of several unresolved issues in a crypto market structure bill that had gained momentum in Congress. Industry executives said the bill, as written, would slow the launch of such products. Coinbase CEO Brian Armstrong publicly opposed the legislation, calling for revisions that would allow the SEC to exempt certain tokenized offerings from standard securities rules.

The Information reported on Binance’s plan earlier.

Read more: Binance co-founder Zhao in talks with ‘probably a dozen’ governments on asset tokenization

UPDATE (Jan. 23, 7:06 pm UTC): Adds Binance’s confirmation, additional context.