After capturing a substantial market share in crypto derivatives trading, FTX a leading crypto exchange is taking a foray into tokenized stock trading.
Now, you can unleash the power of this exchange to reap the benefits of compounding by putting your spare money into the stock market.
FTX enables you to purchase fractional tokenized shares of some of the world’s largest companies. These include tech juggernauts Google, Facebook, Amazon, Microsoft, and automobile giants Toyota, Hyundai, General Motors, and Tesla.
Therefore, if you want to invest in S&P 500 top companies but don’t have adequate money to buy one complete share you should consider the FTX stock trading feature.
Advantages of Tokenized Stocks
Tokenized stock trading is highly beneficial for those interested in compounding their money by putting it into high-yielding stocks.
For instance, in the pandemic-induced lockdown, we’ve experienced a digital transformation of retail businesses. As a result, the demand for eCommerce grew exponentially and the share price of many companies skyrocketed.
Unfortunately, the price of one share of Amazon is greater than $3,000. This is beyond the scope of ordinary investors running on a tight budget.
However, investors can now take advantage of FTXs tokenized stock trading feature.
Leveraging the power of tokenized stocks, a small investor who has a capital constraint can invest in the blue-chip stocks to maximize returns. As opposed to, putting the same money into cheap stocks whereby the chances of profitability are far very lower.
FTX Ahead of the Curve
In order to make its stock trading feature quite unprecedented and to ensure regulatory compliance requirements, FTX exchange partnered with the Germany-based financial firm CM-equity.
This is in addition to, a partnership with the Switzerland-based tokenization solutions provider Digital Assets (DAAG).
When FTX CEO Sam Bankman-Fried was asked to unveil the detail of the tokenized stock trading feature, he asserted:
“A lot of our customers are asking us to incorporate the stock trading feature into our exchange for a while. In the pursuit of our efforts, CM-Equity and DAAG helped us a lot.”
According to the official website of FTX exchange:
“Without the help of DAAG, we won’t be able to bypass all the regulatory hurdles in the way of fractional stock trading”
Tokenized Stock Trading on FTX
You might be wondering whether it is legitimate to invest in equities via FTX exchange or not?
Firstly, CM-equity is a well-regulated financial institution. The company has a great reputation in offering a range of financial products. These include equities, bonds, CFDs, commodities.
Furthermore, investors who trade stocks via FTX will also become the customer of CM-equity. Thus, CM-equity will oversee and monitor all tokenized stock features.
Therefore, FTX exchange issues tokens on the stock equities. And all shares purchased on the exchange are under the custodianship of CM-Equity
Finally, you can redeem these tokens for an underlying share at any time. In the upcoming future, FTX is likely to introduce better ways for withdrawing tokens.
Amidst tokenized trading, FTX allows its users to receive dividends of an underlying stock. Thus, ensuring tokenenized shares on FTX has all the characteristics as those of the traditional markets.
For S&P500, the dividend will be credited to your account at 2 pm HKT. It is imperative to know that dividends will be paid to you after the deduction of gross tax.
And in case of any unintended situations, the technical team at FTX are second to none and will work towards a sustainable solution.
When it comes to eligibility criteria, level 2 KYC compliance is mandatory to trade tokenized stocks on FTX.
And after complying with KYC level 2, you can head over to the settings page of FTX to submit your essential information to CM-equity.
Additionally, to minimize risk to investors, CM-equity may require users to first pass a test before partaking in tokenized stock trading.
First of all, the FTX derivatives exchange is available worldwide.
However, the stock trading feature is currently unavailable in the US. On the other hand, it is worth mentioning that US citizens can participate in tokenized stock trading, provided they do not currently reside in the US.
Additionally, countries currently placed under embargo are prohibited from using the platform. These countries include the likes of Cuba, Crimea, Iran, Syria, and North Korea.
And, in order to ensure to eliminate users from restricted jurisdictions, FTX collects IP addresses and KYC documents.
Stocks are highly volatile and speculative that’s why it is strongly recommended to remain cautious while trading futures on tokenized stocks.
However, for those looking to venture into the world of tokenized stock trading, FTX exchange is a fantastic platform.