Binance, one of the biggest cryptocurrency exchanges in the world, officially launched Tesla crypto stock token(s) on April 13th. TSLA token(s) are short for Tesla crypto stock token(s). Investors can use BUSD (Binance USD, as known as BUSD, a type of stablecoin that is anchored 1-for-1 to the US dollars) to directly buy TSLA token(s) without any commission fee. TSLA tokens are the first of its kind in Binance. Meanwhile, Tesla company is known for its passion toward cryptocurrency.
TSLA tokens sound awesome, but its principle is actually simple. When general investors in Taiwan want to buy the stocks in the US, they must first open an investment account in the US. Then they convert their new Taiwan dollars into US dollars, and wire the money to their US investment account. The balance of the stock transaction will have to be wired back to Taiwan, and then the US dollars need to be converted to new Taiwan dollars or other legal tender. These moves above include complicated processes. Most important of all, the commission fee during settlement and the service charge for internationally wiring the money are extra costs.
This Tesla token's price is closely linked to Tesla's stock price. As of press time, Tesla's stock price was US $701.98, and Binance's TSLA/BUSD pair is priced at US $701.42.
▲Binance's first stock product is the Tesla crypto stock token, closely linking to Tesla stocks. (Source: Binance)
Binance offered a completely guaranteed payment of equivalent quid pro quo, and received permissions from competent authorities. The token's price is guaranteed to be always redeemable. Customers can pay via the stablecoin (BUSD) that is pegged to US dollars at a fixed rate of 1:1.
Simply put, it is like that someone sold a badge to you at the price of US $700. This person guaranteed that this badge's value is equal to Tesla's stock price. You can sell back the badge to this person anytime. The price of the badge is always equal to the Tesla stock price when you committed the transaction.
What are the advantages of this product? The largest benefit of this product is to avoid multiple overseas commission fees and service charges of wiring money. Next, the risks for foreign exchange rate differences are eliminated. Third, Tesla tokens make investment in Tesla stocks easier. Fourth, when Tesla issues stock dividend(s), this token can provide equal value dividend(s).
Don't forget about one thing. This Tesla token and Tesla stock are actually fundamentally different. Your investment in Tesla token in fact is not influential to Tesla stock price. For the former, let's assume an extreme case. If you buy US $1 billion of Tesla stocks, the price of Tesla stock is likely to rise, and the market value of Tesla will grow as a result. For the latter, even though you buy 10 billion of TSLA token/BUSD pairs, the price of Tesla stock won't be influenced at all, and Tesla's market value won't be changed by your action.
Theoretically speaking, such a crypto stock token can be applicable to any stock(s). Why did Binance only launch Tesla crypto stock token for now? Binance didn't specify the reason.
If you are optimistic about Tesla price's long-term growth in the future and you want to avoid the processes of dealing with investing in the US stocks, perhaps you might want to watch how this Tesla token develops. However, please do your due diligence and carefully read the terms of service before you trade with crypto currency. You need to manage your own risks.
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