How to Invest in Tokenized Stocks Using Trust Wallet
Learn how to invest in digital tokens representing shares in Google, Tesla, and Amazon directly from the palm of your hand.
Tokenized stocks enable anyone across the globe with an Internet connection and a crypto wallet to gain investment exposure to publicly traded companies, such as Amazon, Google, and Tesla.
Read on to learn more about tokenized stocks and how you can add them to your crypto portfolio using Trust Wallet.
What Are Tokenized Stocks?
Tokenized stocks are digital representations of shares in publicly traded firms like Tesla, Apple, and Facebook.
These digital tokens are often backed 1:1 to traditional stocks, allowing holders to get the same benefits as owning the underlying stock. The value of these digital tokens is based on the value of the underlying asset.
For example, using a platform that provides tokenized stocks, you can gain exposure to the performance of Amazon, Tesla, Google, and other leading publicly traded US companies.
How Does Tokenizing Stocks Work?
Tokenized stocks allow fractional ownership of traditional securities and 24/7 access to markets. They are similar to standard shares purchased in a listed company, except that tokenized shares are in the form of digital tokens.
Depending on the trading platform, some tokenized stocks are backed by the underlying traditional equities and redeemable, while others simply track the prices of the equities.
You can purchase tokenized stocks with cryptocurrencies or fiat currency on supported trading platforms, allowing you to invest and build wealth in the stock market without any barriers to entry.
Places to Buy Tokenized Stocks
Currently, the number of platforms providing tokenized stocks is small but growing as the global crypto markets are slowly starting to merge with the traditional financial markets.
Below, you will find four platforms where you can buy and sell stock tokens.
There are a handful of centralized exchanges offering stock tokens, with FTX and Bittrex being among the first to offer tokenized stocks.
FTX, one of the biggest centralized crypto exchanges, made the first foray into 24/7 tokenized equity trading, partnering with Digital Assets AG, a Switzerland-based tokenization solutions provider, to let users buy tokenized versions of shares such as Tesla, Amazon, and Apple. The offering also allows users to buy less than one share to reduce the barrier of entry.
According to the platform, the stock tokens are backed by actual shares custodied by CM-Equity and can be redeemed for the underlying shares.
To trade tokenized stocks on FTX, users need to pass through some stringent KYC levels, which could take a couple of business days before you are cleared to start trading.
Trading tokenized stocks on FTX are restricted from residents in the United States, Hong Kong, Singapore, Malaysia and Thailand.
Popular crypto exchange Bittrex was the second centralized exchange to support 24/7 tokenized stocks trading after FTX. The platform allows its users to buy fractions of stocks such as Apple, Tesla, and Google, with US dollars, Tether (USDT), and bitcoin (BTC).
It has added even more stocks since it launched in 2020, including Amazon, Alibaba, Beyond Meat Inc, Bilibili, BioNTech, Facebook, Netflix, Pfizer, and other popular stocks. Users also benefit from corporate actions relating to the stocks, which includes dividends and stock splits.
Bittrex Global also partnered with Digital Assets AG (DAAG) to provide this service and says the underlying stocks are custodied by licensed banks in Europe. However, it notes that the tokenized shares cannot be redeemed for the underlying shares.
Not everyone can trade stock tokens on Bittrex Global yet. The platform excludes users in the European Union, the European Economic Area, Switzerland, and the United Kingdom.
Unlike trading stock tokens on centralized exchanges, there are DeFi platforms that enable anyone across the globe to access stock tokens without restrictions.
Mirror Protocol is a decentralized finance (DeFi) platform that enables users to buy and sell stocks on the blockchain. However, these crypto tokens only track the prices of stocks and are not backed by real shares. Instead, the assets are collateralized by Terra stablecoins or other cryptocurrencies.
The DeFi platform removes all the restrictions that come with centralized crypto exchanges to enable investors anywhere in the world to gain exposure to the price movement of leading stocks.
Mirror tokens are available on two of the biggest Binance Smart Chain DeFi applications, PancakeSwap and StableXSwap, as well as on the Ethereum network.
Synthetix is an Ethereum-based protocol that enables the issuance and trading of synthetic stocks.
Synths, as they are known, track and provide the returns of an underlying asset without requiring you to hold that asset. They are not backed by the underlying assets. Instead, the platform requires 600% collateralization in sUSD, synthetix stablecoin.
The most popular exchange to trade Synthetix assets is Kwenta, and since these assets are issued on Ethereum, you can move and deposit them on other DeFi platforms like Curve and Uniswap and use them to provide liquidity and earn interest.
How to Buy Tokenized Stocks with Trust Wallet
Arguably the easiest way to gain exposure to stocks in tokenized form is using Trust Wallet. You can connect to all of the most popular DApps on Ethereum, Binance Smart Chain, and ten other blockchains either using the in-app DApp Browser (if you are using an Android smartphone) or WalletConnect (if you are using an iPhone).
Here are the steps to buying tokenized stock in Google (MGOOGL BEP20) using PancakeSwap.
Access PancakeSwap and choose “Trade.” Then, click “Exchange” to see the listed set of stock tokens.
You can search for the stock tokens, which include Amazon, Google, Netflix, and Tesla. You will then import the one(s) you want to buy to make them tradable. In this example, we import MGOOGL to buy $100 worth using BUSD (BEP20).
Confirm the swap and, within moments, the purchased MGOOGL tokens appear in Trust Wallet. Just make sure to add the “Wrapped Mirror MGOOGL” token into your list of visible assets in your Trust Wallet.