Binance intends to reintroduce trading of tokenized stocks following its withdrawal in 2021.

The exchange previously halted its attempt due to regulatory scrutiny, but it is now revisiting the possibility of offering tokenized equities on its platform.

Key points:

• Binance is contemplating a revival of stock tokens — digital representations of shares that can be fractionally traded on a blockchain — after ceasing a similar offering in 2021 due to regulatory concerns.
• Competitor exchanges like OKX, Coinbase, and established entities such as the New York Stock Exchange and Nasdaq are also investigating stock token offerings, indicating a renewed interest in tokenized equities within the financial sector.
• Substantial legal and regulatory challenges persist, as pending U.S. legislation on crypto market structure and current securities regulations could hinder or limit the introduction of stock token products.

Binance is considering reintroducing tokenized stock trading on its platform, having previously discontinued the product in 2021.

Stock tokens are digital representations of shares in publicly traded companies. Rather than owning a complete share of Apple or Microsoft, an investor can purchase a fractional share — which is held and settled on a blockchain — reflecting the real-time value of the underlying asset.

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"Binance is dedicated to connecting traditional finance and crypto, broadening user options while upholding the highest regulatory standards. Since the previous year, we have begun supporting tokenized real-world assets, and we recently launched the first regulated TradFi perpetual contracts settled in stablecoin," a Binance representative informed CoinDesk.

"Investigating the possibility of offering tokenized equities is a logical next step in our objective to unite TradFi and crypto as we continuously develop infrastructure, collaborate with traditional institutions, and create innovative solutions for our users and the sector," the representative added.

A shift towards tokenization

This is not the first occasion Binance has pursued this path.

The exchange initially introduced its stock token service in April 2021, starting with Tesla and rapidly expanding to include Coinbase, Strategy, Microsoft, and Apple. This initiative drew attention from regulators, with both the U.K.’s Financial Conduct Authority and Germany’s BaFin questioning whether the tokens breached securities laws. By July of that year, Binance terminated the offering.

However, enthusiasm for tokenized stocks has not diminished.

OKX, another leading crypto exchange, is also exploring this area, as its global managing partner Haider Rafique shared with The Information. Additionally, in the U.S., traditional financial institutions are attempting to enter the market, with both the New York Stock Exchange and Nasdaq seeking regulatory authorization to launch stock token products. Meanwhile, Binance’s counterpart, Coinbase, is also aiming to offer stocks on-chain.

Nonetheless, legal obstacles endure.

Stock tokens were one of several unresolved matters in a crypto market structure bill that had gained traction in Congress. Industry leaders indicated that the bill, as proposed, would delay the launch of such products. Coinbase CEO Brian Armstrong publicly opposed the legislation, advocating for amendments that would permit the SEC to exempt certain tokenized offerings from standard securities regulations.

The Information previously reported on Binance’s intentions.

Read more: Binance co-founder Zhao in discussions with ‘probably a dozen’ governments regarding asset tokenization

UPDATE (Jan. 23, 7:06 pm UTC): Includes Binance’s confirmation and additional context.