bStocks: what happens to dividends?
What happens to a dividend if the stock has already become a token?
In bStocks, the mechanics are different from the usual way dividends are received in a broker account.
If an underlying US stock pays a dividend, its net value does not come to the user as a separate cash payment.
Instead, it is automatically reinvested into the underlying stock, and the number of the corresponding bStock increases proportionally through the Multiplier mechanism.
So the logic looks roughly like this:
stock → dividend → reinvestment → increase in the number of bStock
At the same time, before reinvestment, a US withholding tax on dividends is applied. Binance Academy notes a 30% rate in the current product mechanism.
This is an interesting example of how tokenization changes not only the way an asset is traded.
It can also change how traditional corporate actions are reflected in the digital environment.
And, in my opinion, it’s exactly these details that best illustrate the difference between simply a "blockchain stock" and a fully tokenized financial infrastructure.
What happens to a dividend if the stock has already become a token?
In bStocks, the mechanics are different from the usual way dividends are received in a broker account.
If an underlying US stock pays a dividend, its net value does not come to the user as a separate cash payment.
Instead, it is automatically reinvested into the underlying stock, and the number of the corresponding bStock increases proportionally through the Multiplier mechanism.
So the logic looks roughly like this:
stock → dividend → reinvestment → increase in the number of bStock
At the same time, before reinvestment, a US withholding tax on dividends is applied. Binance Academy notes a 30% rate in the current product mechanism.
This is an interesting example of how tokenization changes not only the way an asset is traded.
It can also change how traditional corporate actions are reflected in the digital environment.
And, in my opinion, it’s exactly these details that best illustrate the difference between simply a "blockchain stock" and a fully tokenized financial infrastructure.