Once hailed as the frontline exchange in offering leveraged derivatives trading, now-defunct FTX also issued another novelty – tokenized stocks. One of the most popular tokenized stocks is GameStop (GME). To understand what happens to these assets now is to understand how they are regulated.
What are Tokenized Stocks?
Just as stablecoins are synthetic assets that derive value from the dollar in a one-to-one ratio, so are tokenized stocks synthetic assets that do the same for companies’ equities. In both cases, the value of an off-chain asset is tracked on-chain in the form of a token.
Token is a contract solely focused on relaying value, while a smart contract governs the conditions under which such value is used. Therefore, when people say they trade tokens, they mean to say they execute a code by which tokens interact with smart contracts.
It is then a matter of ensuring if that coded value is backed, whether the asset is a stablecoin or a stock. Specifically, the value of FTX tokenized stocks is ensured by the German-based CM-Equity AG, a fully licensed investment management firm.
Where Does FTX Fit in the Tokenized Stocks Custody Chain?
Although Binance, Bittrex, and FTX popularized tokenized stocks, it was the Estonian exchange DX that first started listing this form of asset in 2019. While Binance
