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Binance tokenized stocks draw scrutiny from Germany’s financial regulator.

Binance tokenized stocks draw scrutiny from Germany's financial regulator.


As reported earlier, the world’s largest crypto exchange by trading volume, Binance, launched tokens tied to the price of Tesla and Coinbase stocks. The tokenized shares represent a stock on the blockchain and are backed 1:1 by real shares purchased by the crypto exchange. Just like regular stocks, tokenized shares would also pay dividends, but in cryptocurrencies. However, regulators think that these token offerings could be violating securities laws. 

 

BaFin thinks these token could be violating securities laws. 

Germany’s Federal Financial Supervisory Authority, known as BaFin, published a legal opinion, stating that the crypto exchange’s tokenized shares of publicly traded companies could be violating securities laws. Currently, investors in the United States, China, and a few other jurisdictions cannot have access to these tokens on Binance due to regulatory restrictions. BaFin’s announcement could potentially cease the availability of these tokens to European investors at once. The German regulator argued that the crypto exchange should have notified regulators and complied with all necessary procedures before offering tokenized securities to the German market.

 

 Binance’s decision to offer tokenized stocks violates securities laws. 

The German regulator noted that the crypto exchange did not file a prospectus before offering the assets. The announcement noted, “the BaFin has reasonable grounds for suspecting that the Binance Germany GmbH & Co. KG in Germany securities in the form of “shares token” with the terms TSLA / BUSD, COIN / BUSD and MSTR / BUSD without the required prospectuses on its website.” 

The German financial regulator stated that Binance’s decision to offer tokenized stocks constitutes a violation of Article 3(1) of the EUProspectus Regulation. According to the BaFin, a fine of 5 million euros or 3 percent of the total turnover of the last financial year could be imposed on the crypto excchange. 



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