FTX, a major Hong Kong-based cryptocurrency derivatives platform has announced plans to introduce tokenized stock trading, that will see users buy shares belonging to major companies such as Tesla, Amazon, and Apple.
Tokenized Stock Trading Available on FTX Platform
According to Bloomberg on October 29,2020, FTX is offering tokenized equities trading of shares belonging to major companies including Tesla, Amazon, Facebook, Netflix, and Apple.
FTX is launching the new service in collaboration with CM Equity AG, a German-based investment company CM Equity and Digital Assets AG. The latest service will introduce FTX customers to fractional stock trading.
The ability to buy fractions of a share gives traders the opportunity to access expensive stocks of major companies, rather than whole shares. Also, there would be 12 crypto and stock pairs available via the FTX platform.
Speaking on the reason behind the latest offering was FTX CEO, Sam Bankman-Fried, said that FTX’s tokenized equities trading is easier and efficient for users, compared to the inconvenient and outdated method.
Furthermore, while CM Equity acts as a custodian for the stocks, traders will trade the tokens of the shares on the FTX platform. Also, an FTX spokesperson revealed to Bloomberg that the exchange platform will charge trading fees apply but customers will not pay for custodial services.
According to the exchange’s blog post which featured FAQs, the company stated that customers willing to purchase tokenized stocks would need to be verified on FTX’s KYC level 2. Users will also need to complete an additional KYC requirement for CM Equity.
The article also stated that trading will begin next week. However, the United States and other prohibited jurisdictions by the FTX will not access the new service. Apart from equities trading, other products like exchange-traded funds (ETFs), currencies, and futures could be considered, according to the exchange.
An Estonian crypto exchange DX.Exchange earlier announced similar services that would allow its customers to buy stocks of Google, Apple, and Tesla. Also, MERJ exchange and Jumpstart Securities to offer investors tokenized securities.