It has not been long since the cryptocurrency exchange Binance launched its stock tokens. The tokens provide traders with the option to buy tokenized shares of companies. Now, however, these tokens seem to be in trouble now that the German financial regulator has questioned them.
Binance is one of the world’s largest exchanges and has been referred to by some as the Google of the crypto world. A few weeks ago, the trading platform launched tokens for Tesla shares. Later, tokens for Coinbase, MicroStrategy, Microsoft and Apple shares were also launched.
Tokenized shares are crypto tokens that represent the shares on the blockchain. So, instead of buying a share, one can invest in the company by buying the token. This has the advantage, among other things, that the investor does not have to buy an entire share, but can start with one hundredth of a share.
The German regulator, the BaFin, is now questioning the tokens. It would violate various European laws and regulations. In a statement you can read:
“The public offering of securities without an approved prospectus constitutes – unless an exception applies – a violation of the prospectus obligation under Article 3 (1) of the EU Prospectus Regulation. Contrary to Article 3 (1) of the EU Prospectus Regulation, no prospectuses have been published for the public offers of Binance Deutschland GmbH & Co. KG. There are no indications for an exception to the prospectus requirement. ”
What will happen next is not entirely clear. The regulator does report that Binance can be fined up to 5 million euros or 3% of the total turnover of the previous year. Binance will therefore have to take action to avoid such fines.