Binance, the world’s biggest cryptocurrency exchange, announced on Monday that its users will be able to trade more than 7,000 U.S. stocks and ETFs. The company also announced an upcoming plan to allow customers to convert the stocks they hold into crypto-style digital assets as part of its broader ambition to become a “multi-asset financial super app.”
In an interview with Fortune, Binance co-CEO Richard Teng noted that U.S. stocks currently represent well over half of the global equities market, but that for many people in overseas markets, purchasing them comes with considerable cost and friction. Binance is seeking to address this, he said, by offering zero commission stocks to non-U.S. customers, as well as fractional share purchases starting at $5.
The share purchases on Binance will be arranged by a broker dealer called Nest Trading, and a New York-based firm, Alpaca, will handle custody and facilitate dividend payments and corporate actions. Customers can purchase the stock using the stablecoins USDC or USDT, or with a handful of other digital currencies, including Binance’s own BNB.
Teng noted that this is not the first foray for Binance, which has for years been the world’s biggest cryptocurrency exchange, into non-crypto assets. He pointed out that Binance already offers a suite of derivatives that allow customers to get exposure to non-crypto assets such as gold, petrochemicals and pre-IPO shares.
On a broader level, Binance’s push into stocks is the latest example of a growing convergence between the worlds of crypto and traditional finance. This trend has recently seen Binance’s rival Coinbase add stock trading as part of a bid to be an “everything exchange,” and as traditional Wall Street firms like BlackRock offer investments like T-bills in the form of blockchain wrappers.
Binance’s big plans for tokenized stocks
In announcing its stock trading program, Binance also described a bold plan for “bStocks” that will let users tokenize the equities they purchase. In practice, Teng explained, this means customers will soon be able to create a synthetic version of certain stocks by converting them into a digital token on the company’s BNB blockchain.
Other companies, including Kraken and Robinhood, have launched similar offerings over the past year or so, though Binance’s version—which the company says will become available in coming weeks—is potentially unique in that it promises to let customers initiate the tokenization process themselves.
The idea of tokenized stocks, at first blush, may seem exotic or unnecessary. The arrangement, though, offers several advantages compared to traditional stock trading. The biggest of these is that trades of blockchain-base stocks can settle almost instantly, versus a conventional process that relies on Wall Street intermediaries that require a day or more to finalize a transaction.
While some have raised concerns that tokenized stocks could create risks or uncertainty for the all-important U.S. equities market, the concept is fast gaining traction as both the New York Stock Exchange and Nasdaq have announced plans to incorporate the technology.
In a statement, Binance said its bStocks offering will provide a “native bridge from traditional stock ownership to programmable, always-on tokenized assets at a global scale … This unlocks mobility and utility for real-world equities within and beyond the Binance ecosystem, enabling continuous on-chain access and potential DeFi applications, from lending to liquidity provision.”
