Crypto g recently started offering fractional tokenized shares of Tesla and Coinbase, allowing users to get access to traditional stock market shares from within the platform. However, this move could backfire as reports suggest the exchange might face the wrath of European regulators for offering equity, as reported by Financial Times. European regulators are currently examining whether Binance violated the securities laws and whether the tokenized stocks comply with rules governing transparency and corporate disclosures.
FCA is in talks with Binance over new products.
In a recent press briefing, the Financial Conduct Authority (FCA) said that it is in talks with the cryptocurrency exchange to determine whether the new tokenized stocks violated any regulations. “We are working with the firm to understand the product, the regulations that may apply to it, and how it is marketed. Firms and their senior management teams are responsible for determining whether their products and services fall within the remit of the FCA,” the official statement read. The crypto industry has gained mainstream exposure in recent months following bitcoin’s massive winning rally. The exposure has also brought regulators’ attention to the industry.
Binance says it does not offer equity.
According to the European Securities laws, if tokens are transferable, can be traded at a crypto exchange, and are equipped with economic entitlements like dividends or cash settlements, they represent securities and are subject to the obligation to publish a prospectus. However, crypto exchange Binance in its official statement, cited that its newly launched stock tokens are a CM-Equity product that is compliant with the EU’s Mifid II markets rules and BaFin’s banking regulations. Binance said, “currently, users only buy and sell the tokens from and to CM-Equity AG, which does not require a prospectus.”