Binance stock tokens eyed by BaFin, FCA may follow

imageCryptocurrency News6 hours ago (Apr 29, 2021 12:08)

© Reuters

By Samuel Indyk

Investing.com – Stock tokens issued by cryptocurrency exchange Binance have come under scrutiny from the German regulator BaFin, saying that the tokens have most likely violated securities rules.

On Wednesday, the German regulator published a report on its website saying that the tokens tracking shares of certain companies equates to securities trading and therefore a prospectus should have been issued.

Binance began listing stock tokens earlier this month, with Tesla (NASDAQ:TSLA) and Coinbase (NASDAQ:COIN) the first two companies listed on the site. This week, the exchange said they would be adding coins for MicroStrategy (NASDAQ:MSTR), Apple (NASDAQ:AAPL), and Microsoft (NASDAQ:MSFT).

Binance stock tokens are tokens of company stocks that are traded on traditional stock exchanges. Each token, traded on Binance, represents one ordinary share of the relevant stock and is fully backed by a depository portfolio of underlying securities held by CM-Equity. Holders of the tokens will qualify for any potential dividends.

In the note on BaFin’s website, the regulator said that a violation of the prospectus obligations can be punished by a fine of up to EUR 5mln or 3% of the total turnover of the last financial year. Fines of up to twice the economic benefit derived from the breach could also be imposed.

Last week, the UK’s Financial Conduct Authority told the Financial Times that it was “working with Binance to understand the product, the regulations that may apply to it and how it is marketed”.

Commenting on the report from BaFin, Binance spokesperson Jessica Jung said the company plans to work with regulators regarding the products.

“Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate,” Jung said in an emailed statement, as reported by Bloomberg. “We will work with regulators to address any questions they may have.”

Binance stock tokens eyed by BaFin, FCA may follow

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Leave A Reply

Your email address will not be published.