How to buy tokenized stocks of Apple, Amazon, and Microsoft?

When it comes to buying big tech stocks, it’s not that easy for users in many countries. For example, Robinhood, which is often cited as a popular option for stock trading, indicates that you must have a valid Social Security Number (SSN) to use the platform. It means you either have to be a US citizen or have a US visa. Many other brokers also have their own limitations for both start-up capital and support for certain countries.

But with blockchain and crypto-related services, traditional markets have become even more accessible due to the possibility of creating tokenized stocks. With tokenized stocks, there are almost no borders to trade FAANG and other well-known companies’ stocks. But this approach has its own specifics. Here’s what you should know about tokenized stocks and where to buy them.

What are tokenized stocks?

Tokenized stocks can mean several things: either a crypto analog of a real stock represented by a token on a blockchain or a synthetic derivative that reflects the stock price.

For creating a “true” crypto equivalent of shares, you need some legal entity that actually owns a certain number of shares. For example, the US-based company Quadrant Biosciences offered 17% of its equity as tokens that helped it raise $13 million. Quadrant Token holders have all rights related to shareholder status, including the right to vote for the board of directors and receive dividends.

At the same time, a synthetic derivative does not give you any voting rights and you do not have the opportunity to receive dividends. A synthetic derivative only reflects the price of a real asset. It enables investors to trade stocks, earning on the price difference. That is, in a sense, some kind of crypto analog of CFDs.

Apple, Amazon, and Microsoft haven’t officially issued or converted part of their shares in the form of tokens as Quadrant Biosciences did. It means that those who want to buy tokenized stocks of these companies are likely to buy synthetic assets. If a company actually owns part of the company’s shares, then it can create tokens and offer its trading. But that may cause some regulatory problems.

What are the benefits of tokenized stocks?

Tokenized stocks can be called shares with the advantages of cryptocurrencies. Like cryptocurrencies, tokenized stocks can be bought in most countries around the world, making them more accessible than traditional stocks.

Another advantage of tokenized stocks is their divisibility. The traditional stocks are indivisible that can make them less convenient to invest in. For instance, Amazon stocks are currently worth over $3,000 each, forming a relatively high entry threshold for investors. But with tokenized stocks, you can buy a tenth or even one-hundredth of the shares. It all depends on your budget and the provider of tokenized stocks.

The cryptocurrency market is available 24/7, while stock exchanges are open at specific times. So, “true” tokenized stocks like those issued by Quadrant Biosciences are available 24/7. Synthetic shares are linked to real asset quotes but are also predominantly available 24/7 (depending on the asset specifics).

How to buy tokenized stocks?

Crypto exchange

In 2021, some exchanges began to actively explore adding tokenized stocks of popular companies. Binance started offering tokenized stocks in April 2021, claiming that tokenized assets are fully backed through shares held by its partners CM-Equity AG and Digital Assets AG. But a few months after the announcement, Binance decided to wind down support for tokenized stocks due to regulatory concerns.

FTX and Bittrex also provide the ability to trade tokenized stocks through partnerships with the above-mentioned companies. As for now, assets are still available for trading, despite the situation with Binance. However, access to these assets is limited depending on the user’s country and verification level.

DeFi

DeFi projects are more focused on synthetic derivatives, rather than tokenized stocks backed by real shares as crypto exchanges do. Quite often, there is no need to go through KYC and there is no country restriction if you want to trade synthetic assets using DeFi services.

The most popular protocol for creating synthetic assets is Synthetix with a $1.9 billion total value locked in the protocol (TVL). Synthetix was the first project to introduce synthetic assets and begin offering them on the Ethereum blockchain. Synthetix uses Chainlink oracles to get up-to-date information on the latest quotes for real assets.

Now the Synthetix platform offers over 30 different synthetics, including Apple, Amazon, Microsoft stocks, as well as assets like fiat currencies, gold, and indices. Synthetix-based assets can be traded on the Kwenta.io platform. To create and trade synthetic assets on the Synthetix platform, you need to have SNX cryptocurrency that you can buy on crypto exchanges such as CEX.IO.

Following Synthetix is ​​Terra-based Mirror Protocol with over $1.6 billion TVL. Synthetic assets on the Mirror Protocol are called mAssets. Besides Apple, Amazon, and Microsoft, the Mirror Protocol also allows you to buy synthetic assets based on other stocks, cryptocurrencies, ETFs, silver, etc. Mirrored assets can be stored in a crypto wallet and traded on Uniswap and Terraswap, ensuring asset liquidity and high availability. The Mirror Protocol relies on stock quotes provided by a decentralized oracle system Band Protocol. Other well-known protocols for synthetic assets include Uma and DAFI.

Tokenized stocks provide an excellent opportunity for companies to raise funds by making them more accessible to investors. At the same time, investors get the best of two worlds: stocks and cryptocurrencies. But tokenized stocks are nascent and their influence is not so big, leaving a certain degree of uncertainty about their further development. However, tokenized stocks and synthetic derivatives continue gaining popularity in the crypto space that could force regulators and institutional investors to pay more attention to such assets.