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Binance to relaunch trading of tokenized stocks
Binance exchange is exploring the possibility of relaunching trading in tokenized stocks — for the first time in five years after discontinuing the service in 2021. A platform representative told Cointelegraph that “exploring the potential of offering tokenized equities is a natural next step” in bridging traditional finance and cryptocurrencies.
Return after regulatory pressure
Binance first launched tokenized stock trading in April 2021, starting with Tesla and gradually adding shares of other technology companies — Coinbase, MicroStrategy, Apple, and Microsoft. However, as early as July 2021, the exchange announced it would discontinue support for tokenized stocks due to increased regulatory scrutiny.
German financial regulators expressed concerns over Binance’s offerings, while the UK Financial Conduct Authority in June 2021 required the exchange to cease “regulated activities” in the country.
“Binance is working to integrate traditional finance and cryptocurrencies, developing user services while strictly complying with regulatory requirements,” a Binance spokesperson said. The representative added that since last year, the company has begun supporting tokenized real-world assets (RWA) and recently launched its first regulated perpetual contracts in traditional finance settled in stablecoins.
In December last year, changes to Binance’s application programming interface suggested that the platform was laying the groundwork for rolling out stock trading functionality. However, the exchange did not officially confirm this move at the time.
U.S.-based crypto exchange Coinbase is also currently considering adding tokenized stocks to its range of services.
Legislative hurdles in the United States
Alongside exchange plans to offer tokenized stocks, a digital asset market structure bill is being discussed in the United States. The Senate Agriculture Committee and the Senate Banking Committee are reviewing legislation to regulate digital assets in the country.
The Agriculture Committee has scheduled consideration of its version of the bill for next week, while review by the Banking Committee has been postponed indefinitely after Coinbase withdrew its support.
Coinbase CEO Brian Armstrong explained his opposition to the market structure bill in a social media post on January 14, stating that in its current form it would amount to a “de facto ban on tokenized equities.”
Other stakeholders have also opposed the bill, including banking associations and lawmakers who have criticized provisions related to stablecoin rewards, conflicts of interest, and decentralized finance.
AI perspective
Machine-based market analysis reveals an interesting pattern: the return to tokenized stocks coincides with a period of declining cryptocurrency trading volumes on major exchanges. Binance and Coinbase are effectively competing for the same liquidity — institutional investors who want to trade traditional assets on crypto markets but currently prefer Bitcoin ETFs.
The technical infrastructure for tokenization has changed dramatically since 2021. Blockchains have become faster and cheaper, and most importantly, solutions for instant arbitrage between tokenized and traditional stocks have emerged. This could address the main issue of the previous attempt — significant price discrepancies. However, the question remains open: are traditional brokers ready to compete with crypto exchanges on their own turf?
See also: "Nasdaq Threatens to Delist Another Crypto Company"
