Binance, a major cryptocurrency exchange, announced today that it will end its stock token product. This announcement comes just days after Italian regulators joined forces with a number of financial watchdogs in an effort to crackdown against the platform.

Binance stated that stock tokens were no longer available for purchase on Binance.com. Binance.com also announced that they would be shifting their commercial focus to other products.

Why Binance made the decision

The cryptocurrency exchange introduced the stock token offering in April. Customers could buy fractions in shares of companies. It began with Tesla stock, and shortly thereafter, Coinbase, MicroStrategy, and Microsoft were added.

There have been many regulatory problems with Binance in recent months. Italy is the latest country to confront Binance’s financial watchdogs. Yesterday, Italy’s market regulator declared that Binance was not licensed to offer investment services or activities in Italy. This is even though Binance’s main website has provided information in Italian about stock tokens and derivatives.

Apart from the concern expressed by the Italian regulator about Binance’s issuance of stock tokens, BaFin, the German regulator, voiced similar concerns in April. It stated that Binance could be fined for offering stock tokens and not publishing an investor prospectus.

Nairametrics recently reported that the United Kingdom’s Financial Conduct Authority had banned cryptocurrency exchanges from operating in the country. It stated that the exchange wasn’t approved by the FCA’s crypto registration regime, which is required for UK-based groups offering digital assets services. This is not related to the company’s offering of tokenized stocks.

News of a class-action lawsuit filed against the platform’s futures trading platform by investors who claim that they have lost “tens to millions of dollars” due to the inability to view their balances and manage their positions during peak trading hours has also made headlines. The lawsuit was filed by a group of international and Italian investors.

Apart from the countries mentioned above, other countries such as the United States, Canada, and Thailand have taken action against Binance by investigating, filing criminal complaints, or banning it from operating in their country’s space.

This is what it means

Binance isn’t the only centralized cryptocurrency exchange that offers tokenized stocks. BitPanda and FTX also offer the service. Binance’s decision to discontinue offering this product has drawn a lot of criticism from regulators. Binance’s decision to stop the product’s sale also demonstrates the company’s commitment to regulatory compliance.

Changpeng Zhao (or CZ), Binance’s CEO, announced that Binance had increased its compliance team by 500% in 2021. He also stated that the company is planning to increase its complaint capacity by 1000% by the end of 2019.

Binance’s native token BNB, currently trading at $303.68, was down by 3.88% at the time this report was written.

Source: NaijaNGR

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