Tokenized versions of popular stocks such as Tesla Inc TSLA and Facebook Inc FB will be available for trading on FTX through infrastructure made available by Swiss firm Digital Assets AG or DAAG using the Solana SOL/USD blockchain, the latter said in a statement.
What Happened: Digital Assets said that, at the onset, 55 free-floating stocks, including Netflix Inc NFLX, Alphabet Inc GOOGL GOOG and Nvidia Corporation NVDA, will “be available exclusively on FTX.”
The tokens, at launch, will be available for KYC’d buyers and sellers in permitted jurisdictions only. The tokens are valid in the European Economic Area and the securities prospectus has been endorsed by the Financial Market Authority of Liechtenstein, as per the statement.
See Also: How To Buy Solana (SOL)
Sam Bankman-Fried, founder and CEO of FTX, said the launch would "help facilitate a paradigm shift in the underlying market structure."
Why It Matters: Tokenized stocks already exist, including from DAAG, but the firm says the launch on Solana blockchain will solve many existing pain points.
"Currently, tokenized stocks can be traded on a singular entity such as an exchange or private blockchain and only give users the option to open or close positions, but are restricted by constraints such as the inability to make withdrawals, or transfer cross-chain or to an external party," DAAG said in a statement.
With the latest launch, all centralized and decentralized exchanges built on Solana will be able to add tokenized stock trading to their platforms, the firm added.
Brandon Williams, corporate development lead at Digital Assets, said Solana will make for a "much more efficient, and cost-effective environment for the trading and utilization of tokenized stocks.”
Patrick Gruhn, chief legal officer at Digital Assets Group, told Benzinga that tokenization is important because tokenized stocks can be used in Decentralized Finance, or DeFi, space.
Gruhn told Benzinga that individual tokens represent the underlying shares and serve as financial instruments with an assigned ISIN, or International Securities Identification Number.
“Many tokens in the crypto space represent something the same e.g. stablecoin like USDC, also those [tokens represent] the underlying (USD) while in our case they represent the actual shares.”
On how investors can be sure if a stock token is what it claims to be, Gruhn said, the “endorsed prospectus by the regulator makes the hedging with a collateral mandatory and additionally DAAG will provide audit reports to the community.”
Digital Assets offers tokenized stocks through the FTX, Binance and Bittrex Global exchanges.
It is noteworthy that Solana is backed by FTX CEO Bankman-Fried and his trading firm Alameda Research has been investing in the platform since its early days.
Read Next: Why Tesla Stock Token's Marketing Could Lend Binance In Regulatory Trouble
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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