Major cryptocurrency exchange, Binance stated today that it is putting an end to its stock token product. This comes a day after Italian regulators joined a string of financial watchdogs to crack down on the platform.
Binance stated on its website, “Effective immediately, stock tokens are unavailable for purchase on Binance.com, and Binance.com will no longer support any stock tokens after 2021-10-14 19:55 (UTC).” The exchange also added that it would shift its commercial focus to other product offerings.
Why Binance took the decision
The stock token offering was introduced by the cryptocurrency exchange in April. It allowed customers to buy fractions of shares in companies. The platform started with Tesla stock and then Coinbase, MicroStrategy, Microsoft and Apple were added shortly after.
Binance has been facing a lot of regulatory issues of late. The exchanges latest battle with financial watchdogs comes from Italy. Italy’s market regulator stated yesterday that Binance was not authorized to provide investment services and activities in Italy, even via its main website which has offered information in Italian on derivatives and stock tokens.
Asides from the Italian regulator expressing concern over Binance’s issuance of stock tokens, the German regulator BaFin, had voiced a similar concern in April and stated that Binance risked being fined for offering stock tokens without publishing an investor prospectus.
Nairametrics reported recently that the United Kingdom’s Financial Conduct Authority (FCA) banned the cryptocurrency exchange from operating in its country stating that the exchange was not approved under the FCA’s cryptocurrency registration regime which is required for UK groups offering digital asset services. Although this is unrelated to the company offering tokenized stocks.
Also, news of a class-action lawsuit against the platform’s futures trading by investors who claim they lost “tens of millions” of dollars due to not being able to manage their positions and view their balances during peak trading hours, has made headlines. This lawsuit comes from a group of Italian and international investors.
Asides from these countries above, others like the Japan, United States, Canada, Thailand and the Cayman Islands have all taken steps against Binance in the form of an investigation, filing criminal complaints or banning the platform from operating within the country’s space.
What this means
Binance is not the only centralized cryptocurrency exchange offering tokenized stocks as FTX and BitPanda are doing the same. The move by Binance to stop the offering of this product means that the company is getting a lot of heat from regulatory bodies over the product. Binance’s move to end the product also shows the company’s commitment to regulatory compliance.
At the Binance 4th Anniversary, the CEO of Binance, Changpeng Zhao, popularly known as CZ, stated that Binance has increased its compliance team by 500% so far in 2021 and is looking to increase the company’s complaint capacity by another 1000% before the end of the year.
Binance’s native token, BNB is currently trading at $303.68, down 3.88% as of the time of writing this report.
