They are tokens whose value is determined by the underlying assets: securities, commodities, derivatives, real estate, or works of art. Why do they exist and how do they work? Let’s find out!
Trading tokenized and traditional assets yields the same results: if the price of BABA (Alibaba Group) shares rises by $2, then the value of tokenized BABA.cx shares will increase by the same value.
Besides, holders of tokenized assets receive regular charges: adjustments for dividends, bond coupons, and others.
Traditional asset issuers create ownership records in registries and auction off objects. They change the records of the asset owners during the transaction process.
Tokenized assets are created in a similar manner, but the issuers use the blockchain.
Tokenization can be accomplished in two ways:
- With purchase — the token holder can exchange it for an underlying asset. Such assets are traded on the FTX platform.
- Without purchase — the Token holder can not exchange it for an underlying asset. In this case, the asset value is secured by cryptocurrency or fiat money. Such tokens are traded on the Currency.com exchange and some other platforms.
The investors can buy tokenized assets on a spot market, withdraw them to an external wallet, and trade them with leverage with no withdrawal option.
Not really. NFTs are non-fungible tokens with unique identifiers and special content. The price of two identical NFTs may differ.
Tokenized assets, like stock market shares or raw material supply contracts, are fungible and equivalent.
However, NFTs that indicate ownership of physical objects can also be considered tokenized assets.
Crypto exchanges are granted a license to operate with digital assets and enter into a quotation supply agreement with a broker. If the issuing exchange purchases assets for tokenization, the broker stores them and acts as custodian.
To regulators, trading tokenized assets is no different than trading cryptocurrency.
If you want to trade on a traditional exchange, you must first sign a contract with a broker, which may require a paper version. Brokers frequently set fixed commissions for asset trading, such as 0.1% of the transaction value but no less than $50. There are hidden fees for account maintenance, asset storage, and limit order withdrawal.
Trading tokenized assets necessitates signing up for crypto exchanges and the KYC procedure. The commissions on cryptocurrency platforms are transparent. There are no hidden fees: when withdrawing funds to an external wallet, users pay a percentage of the transaction amount as well as transaction fees.
Traditional brokers have a limited asset portfolio. They trade stocks of national companies, local mutual funds, fiat currencies, and popular commodities such as gold. The reason for this is the legal difficulties in adding foreign assets.
- Crypto exchanges provide users with a wide range of tokenized assets, such as:
- shares of popular companies in the USA, Europe, and Asia;
- commodities from gold to rubber;
- ETFs by indices and industrial sectors;
- stock indexes, fiat currencies and government bonds.
Here are some platforms where you can trade tokenized assets:
- Currency.com — more than 1,800 assets: 1,700 stocks, 30 commodities, 50 stock indexes and ETFs, 16 fiat currencies in various markets in tokenized form;
- FTX — 100 trading pairs with tokenized assets;
- Bittrex — more than 50 tokenized shares in pairs with bitcoin, USDT and the US dollar;
- Bitpanda — 212 tokenized stocks, ETFs and precious metals;
- Mirror Protocol — 30 tokenized shares with excess collateral in cryptocurrency;
- Synthetix — 7 tokenized fiat currencies.
- Terms of tokenization on the platform — with or without purchase. In the first case, tokens can be exchanged for assets; in the second, they can only be traded.
- The method of getting regular payments like dividends to holders’ accounts or as corrections to asset rates.
- Trading pairs — with Bitcoin, USDT, or tokenized fiat currencies. On Currency.com, for example, Japanese stocks are traded against the tokenized yen JPY.cx, while American stocks are traded against the tokenized dollar USD.cx.
- Trading sessions are either continuous or limited. The platforms may suspend trading in accordance with the stock exchanges’ schedules.
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You can also try your hand at working with cryptocurrency on our platform Sunflower Corporation.
For traders on the lookout for new trading tools. The bitcoin exchange rate is frequently followed by cryptocurrencies. Simultaneously, the prices of tokenized stocks, indices, raw materials, and other assets can rise and fall independently.
Tokenized assets can also be used to diversify a cryptocurrency portfolio without the need to register on third-party platforms or enter into contracts.
New to trading? Try crypto trading bots or copy trading