A brand new product has arrived in the crypto-asset sphere! Digital tokens in French.

These share tokens are indexed to the value of the underlying share. In other words, if the value of the share rises, so does the value of the share token.

Equity tokens are OTC derivatives (transactions concluded directly between the seller and the buyer) and are non-fungible (not interchangeable).

On the other hand, the underlying share is a normal share quoted on the markets, and fungible.

The first two platforms to offer this type of product are Binance and FTX. It is possible to buy these tokenized shares while remaining in the world of digital assets, which can be a tax advantage.

Once these tokens have been purchased, the platform (or service provider) directly buys the underlying shares to guarantee their value. It is even possible to receive dividends via the tokenized shares.

Here are the 6 shares currently available for purchase on the Binance platform. Prices are at market value. At present, they can only be purchased with BUSD, stablecoin of Binance.

However, holding these tokenized shares does not give you any shareholder rights. You can only benefit from share price rises (or falls) and dividends.

Share tokens are open for purchase only during U.S. market trading hours.

To purchase these shares, you must first have an account with Binance, as well as validated identity verification. Moreover, the jurisdiction of certain countries does not allow the purchase of this type of share.

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What can this new innovation do for you?

A tax advantage:

If you've already made capital gains in the world of digital assets, then you can expose yourself to the world of equities via these tokenized shares without this purchase being a taxable event. However, you won't be able to avoid 30 % tax on capital gains in France, the day you convert these tokenized shares into euros or FIAT dollars.

A diversification advantage:

Buying shares via these tokenized stocks allows you to diversify your portfolio. Volatility and risk in crypto-assets are notoriously high.

So it's important to know how to "take those profits" and diversify into less volatile, less risky assets.

Accessibility advantage:

The purchase of shares via a securities account or PEA may require minimum amounts. For example, the purchase of a whole share may be compulsory, raising the minimum investment to €1,000 or €500.

Tokenized shares are splittable, allowing you to buy portions of shares, bringing the minimum investment to around twenty euros.

Disadvantages:

This solution remains a doubly centralized service. This means that there are risks of "bankruptcy" associated with the two entities, both Binance, but also the trusted third party through which they go to actually hold the shares.

There's also the classic risk associated with a fall in the share price.

There are also other technological risks associated with issuing tokenized shares.

This brief overview will give you a better understanding of this new product and its advantages/disadvantages. Do your own research, invest only in what you understand and in amounts you can afford to lose.

Tristan