One of the leading crypto exchanges by trading volume, FTX, has partnered with European financial companies CM Equity AG and Digital Assets AG to enable tokenized equity trading.
The platform’s users will have access to top stocks, including Apple, Amazon, and Tesla, along with the popular indices, such as the S&P 500. The US, along with some other jurisdictions, won’t get access to the offering.
With about $1.5 billion trading volume, the exchange is the industry’s six-most popular trading venue, attracting a large audience of traders. However, this demographic has had difficulty accessing the traditional stock market, according to the exchange’s CEO, Sam Bankman-Fried.
Notably, a large portion of FTX’s user base comes from China, which may concern American regulators, considering the ongoing political frictions.
FTX traffic sources by country. Source: SimilarWeb
CM Equity AG will hold the traded equities, while the tokens will work like depositary receipts or ETFs. If a trader wants to hold an actual stock, they will need to do it through CM Equity AG.
An important advantage of the tokenized securities is that the platform allows fractional ownership. Fractional ownership allows retail traders to make smaller deposits. Moreover, traders won’t have to pay for custody; FTX will only charge trading fees.
Merging crypto and traditional markets have been a focus for many startups in the space. For example, the decentralized derivatives platform Synthetix provides access to traditional equities like NIKKEI and FTSE. However, unlike FTX, the platform doesn’t provide ownership of the underlying assets.
Although the FTX offering has some regulatory risks, it’s a significant step in building the crypto space’s credibility.
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