Crypto evolution: 4 things to know before trading tokenised stocks
Tokenised stocks are garnering attention in the crypto community. We take a closer look at trading them with Pepperstone Crypto.
Sponsored by Pepperstone Crypto. $0 fees. All spot trades. Trade as much as you want. Spreads apply. Offer ends July 31st.
Risk Warning: Digital Assets are highly volatile. You may lose some or all of your investment. Ensure you understand the risks - see our Risk Disclosure. Website information is general only and not intended for use where our products/services would breach local laws. Seek independent advice if required.
Cryptocurrency markets have quietly matured into a complex ecosystem where traders can now access traditional assets like stocks, gold, forex and even property through tokenisation.
So for Aussies, that means that there are additional ways to gain exposure to industries and assets that may have been prohibitively expensive or difficult to access in the past.
One provider offering this service is Pepperstone Crypto, who provide Australian traders with access to US stock markets via tokenised stocks.
This means you can speculate on the price of in-demand assets like Tesla (TSLAX), NVIDIA (NVDAX) and Apple (AAPLX) without requiring the same processes that are normally associated with buying and selling US stocks as an Australian.
So let's take a look at what you need to know before expanding your portfolio.
You can gain exposure to new markets
If you've ever bought US stocks before, you'll know the complications typically involved: opening a second brokerage account, converting AUD to USD, forex fees and currency risk, IRS forms, and having to wake up early to trade during US market hours.
Tokenised stocks offer a different route.
Tokenised stocks are blockchain-based versions of real-world shares, with their value designed to mirror the value of the underlying stock. So you have exposure to the price, rather than the underlying shares or assets.
It's somewhat akin to CFDs, though functions in a different way due to the underlying blockchain and the lack of set timeframe on sales.
This can offer a variety of benefits, including round-the-clock trading, fractional ownership and faster settlements than may be offered by traditional exchanges.
In some cases, it can also provide faster access. For example, you can also trade in-demand assets like SpaceX (SPCX) shortly after they IPO.
You can access them via Pepperstone Crypto
Pepperstone Crypto already offers 14 tokenised stocks including Nvidia, Apple, Microsoft, SpaceX, Alphabet and Meta, plus two ETFs – QQQ and the S&P 500.
As the ecosystem expands, expect exposure to markets beyond the US, giving you deeper diversification across your portfolio.
On platforms like Pepperstone Crypto, tokenised stocks are priced and traded in AUD, managed from the same broker as your existing stocks and crypto, and trade 24/7 instead of being limited to US market hours. You have exposure to the price, not the stock itself.
Pepperstone Crypto currently charges $0 fees across all spot trades, and you can trade as much as you want. Offer ends July 31st.
Instead of trading fees, Pepperstone Crypto makes money via the spread (the difference in buy and sell prices). This means the price you see is the price you pay, and there are no fees.
On Pepperstone Crypto, you can buy tokenised stocks using cryptocurrency you already own. This allows you to easily move from one asset to another without having to go back into AUD or USD first – which can quickly rack up fees.
One thing worth noting is that your tokens can't be withdrawn off the platform, but they sit in your existing Pepperstone Crypto account alongside your other cryptocurrencies. However, you can buy and sell them using the Pepperstone Crypto platform
Fractional ownership with Pepperstone Crypto
Tokenised stocks allow for fractional ownership, which can be useful for new investors or those with smaller portfolios.
Fractional ownership means you can invest exactly how much you want to in AUD, rather than having to buy whole shares at a time, which can run into the $500+ range for popular stocks like Meta (META), Tesla (TSLA) and Microsoft (MSFT).
This lets you get invested sooner, without having to save up large amounts to meet the minimum purchase requirements.
Trading with Pepperstone Crypto
Pepperstone Crypto allows you to trade across a broad range of crypto products, including cryptocurrencies and tokenised stocks
🪙A broad choice of assets
Choose from a growing range of cryptocurrencies including BTC, ETH, SOL and more.
💸Competitive pricing on tokenised stocks
$0 fees. All spot trades. Trade as much as you want. Spreads apply. Offer ends July 31st.
⏰Uninterrupted 24/7 trading
No weekend platform downtime or associated price gaps.
They can offer reduced admin and costs
When you're trading US stocks, most brokers will charge you a brokerage fee as well as forex conversion fees each way (when you go into USD, and back into AUD). You may even have to pay a custody fee, which is the cost of holding the asset on your behalf.
However, trading tokenised stocks through Pepperstone Crypto can reduce the admin and costs by only charging a spread.
The spread is the discrepancy in price between the buy and sell price you see for the same asset. Everything is priced in AUD via Pepperstone Crypto too – so you don't have to worry about calculating conversion rates when timing your entry or exit in AUD.
We'll talk in more detail about risk in a moment, but it's important to note that this isn't the same as removing currency risk though. The AUD price of a token like SPCX still moves with the underlying share price (in USD) and the AUD/USD exchange rate – but this is true for regular US stocks, not just tokenised stocks.
Another benefit is that you don't need to complete US paperwork like an IRS W-8BEN form, which is normally required to trade US stocks. It's not tax-free though – you still need to report your disposals (sale or conversion of tokenised stocks) to the ATO at tax time.
There is risk involved
Tokenised stocks can offer a number of benefits, especially to traders who want 24/7 access to overseas markets. But they're not without their risks:
- You're not a shareholder: Trading tokenised stocks doesn't actually make you a shareholder. You can benefit from price movements, but you won't be entitled to other benefits such as voting privileges or dividends.
- Currency risk: As discussed, the currency difference between AUD and USD can potentially accentuate losses if they occur.
- Regulation is still catching up: Tokenised stocks (and tokenised assets in general) are still relatively new investment territory. So it's important to look for operators who have a longer history with investments and abide by appropriate legislation. For example, Pepperstone Crypto's parent organisation has been in operation since 2010, and is AUSTRAC-registered.
Last, but not least, maintaining good digital security practices is key. As with any crypto (or digital) product, hacks are a risk. However, Pepperstone Crypto has a number of security measures in place to help mitigate potential risks and protect customers.
Learn more about trading with Pepperstone Crypto today
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