As of writing, the cryptoverse had bounced back a little. Bitcoin, arguably its heart, which had declined below US$30,000, had pared some losses. Altcoins like Ether and Dogecoin had also gained in the past 24 hours.
Aside from Bitcoin and altcoins, the cryptoverse has other categories as well. A non-fungible token (NFT) represents blockchain-registered title over some independent asset. Another relatively less popular asset is a tokenized stock of any scrip trading on any traditional exchange like Nasdaq.
FTX, a crypto exchange, has listed the tokenized stock of Tesla for trade. Let’s know more.
Tesla tokenized stock or Tesla Token
FTX claims that tokenized stocks offered by it are backed by shares trading on the traditional exchange. Tesla Token, available on FTX, tracks the stock price of Tesla (TSLA).
As of writing, Tesla tokenized stock was trading at nearly US$750. It had registered over three per cent gain in the past 24 hours. FTX states that Tesla Tokens are backed by shares of Tesla, which it maintains with an independent brokerage firm. Token holders, it is claimed, can redeem their holding against the underlying Tesla stocks.
Trading in Tesla Token is said to be available at all times, similar to 24×7 trading in cryptos.
Also read: 3 cryptos that are gaining amid crash in the cryptoverse
Tesla Token availability
FTX has clearly mentioned on its website that residents of the US cannot avail its services. Other nations that the FTX says it does provide services in include Cuba and North Korea.
Further, the crypto exchange says that services are partially restricted in some other jurisdictions, which include Canada, Hong Kong, and India. It is expressly declared that users based in the Ontario province of Canada cannot use FTX services.
The availability of Tesla Token, which trades on FTX, hence depends on the user’s location.
Also read: Terra (LUNA) crypto falls more than 50%: Why?
Is Tesla Token safe?
FTX claims to maintain the custody of Tesla stock to back Tesla Tokens listed on it. Recently, the dip in the value of a stablecoin, TerraUSD (UST), has worried many crypto watchers. Stablecoins maintain peg with a certain asset like gold or fiat currency. By that measure, UST, pegged to the US dollar, must always have a value of US$1.
As of writing, UST traded below US$0.2, which reflects the vulnerabilities of the crypto market. How Terra ecosystem maintains its reserves to back the value of UST is said to have caused troubles.
Tesla Token may not be fully immune to such risks.
Data provided by CoinMarketCap.com
Also read: GYEN stablecoin trading volume up 700%: What could it mean?
Bottom line
Tesla Token, offered by FTX, tracks the price of Tesla stock. It is claimed to be backed by Tesla stocks, which FTX says it maintains with a third party entity. The UST stablecoin crash episode is a reminder that caution is extremely necessary in cryptoverse.
Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.
