Binance allowed consumers outside the US, China, and Turkey to trade shares through crypto coins.
- Binance starts a new venture allowing trading of shares through crypto coins
- Binance terms the latest move the coming of age of cryptocurrency
- UK and German regulators watch developments closely
Cryptocurrency trade is increasingly being scrutinized by major regulators worldwide. The latest news is that European regulators are closely watching if Binance, a major cryptocurrency exchange, has followed the letter rules over its launch of trading in stock coins.
According to a Financial Times report, Binance, in its new venture last week, had allowed consumers outside the US, China, and Turkey to trade shares through crypto coins, with tokens that correspond to a share in a stock corporation. The move marks one of the essential plunges by a prominent digital currency into one of the most protected and chic markets.
Transparency with no security risk
Changpeng Zhao, Binance’s chief executive, hailed the move as the first step towards transparently making smooth value transfer without compromising compliance and security.
However, the move has provoked regulators questioning if it complied with the rules governing transparency and corporate disclosures.
UK and German regulators keeping a close watch
The Financial Times quoted the UK’s Financial Conduct Authority which stated that it is working with the firm to understand the product and check if it was within the purview of the FCA. German watchdog BaFin however, refused to comment on the issue citing confidentiality rules. However, it added that if the tokens are transferable, they can be traded on a crypto exchange and offer economic entitlements like dividends or cash settlements. It can be labeled as securities and are subject to the obligation to publish a prospectus.
The Financial Times further quoted Binance, which labeled stock tokens are a CM-Equity product and fully compliant EU’s Mifid II markets rules and BaFin’s banking regulations. It also clarified that users only buy and sell the tokens from and to CM-Equity AG, which does not require a prospectus.
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