Swiss-based Digital Assets AG has launched tokenized shares that can be transferred to any entity on the Solana blockchain.
Popular stocks available for trading immediately include Facebook, Google, Netflix, Nvidia, PayPal, Square, and Tesla.
With this so-called stock tokenization, you can buy company shares as crypto tokens that represent the value of the underlying asset – whether Apple, MicroStrategy or Coinbase shares.
According to Brandon Williams, head of corporate development at Digital Assets AG, these transferable equity tokens will “build a bridge between traditional finance and decentralized finance (DeFi).“
This is because until now tokenized stocks could only be traded on a singular unit such as a cryptocurrency exchange (such as Binance or Bittrex) or a private blockchain. Users could open or close positions – but they were not able to withdraw tokenized shares, send them to an external party, or transfer them across different chains.
But the transferable tokenized stocks being introduced on Solana are designed to allow centralized and decentralized exchanges built on this public blockchain to include trading tokenized stocks in their platforms.
Advantages of tokenized shares
Hong Kong – listed cryptocurrency exchange FTX is the only exchange where customers can buy these transferable tokenized shares-at least for now. FTX CEO Sam Bankman-Fried is also the main supporter of Solana.
But: why buy tokenized stocks on FTX, a cryptocurrency exchange, when you can buy stocks on tradingapps like Robinhood?
According to Williams, tokenized stocks have a few advantages over traditional alternatives. FTX traders will be able to withdraw their stock tokens and subsequently deposit them into their own crypto wallets. These are software programs that help store cryptocurrencies privately rather than on cryptocurrency exchanges. From there, stock tokens can be moved to DeFi and traded 24/7 on Solana-built decentralized exchanges like Serum.
Traders can also use these tokens to create their own fund – like smart contracts on DeFi that automatically reallocate the positions-which is useful for decentralized autonomous organizations (DAOs).
Williams emphasizes that the company has received the necessary green light from the tax authorities to launch in Switzerland and the European Economic Area (EU countries plus Iceland, Liechtenstein, Norway and Croatia). However, customers in other countries such as the United States will have to wait until regulatory complexity is addressed.
Text credit: Decrypt
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