EU Authorities have recently reported that they will be investigating the latest product from the cryptocurrency Binance, the digital stock tokens. The tokens that represent the fractions of stocks like Coinbase and Tesla are scheduled to be investigated by the European and the UK regulators over securities law consent.
EU Regulators to Investigate Binance Over Possible Breach of Security Laws
In accordance with the data revealed in a recent report, the European regulators are worried that the stock tokens may provide enough translucent firm information, particularly an investment lookout.
The prospectus of investment would be required if the tokens were to be judged as securities.
BaFin, the Federal Financial Supervisory Authority of Germany revealed that although it couldn’t directly comment particularly on the case, they would like to say:
“FUNDAMENTALLY […] THE FOLLOWING APPLIES: IF THE TOKENS ARE TRANSFERABLE, CAN BE TRADED IN A CRYPTO EXCHANGE, AND HAVE ECONOMIC RIGHTS SUCH AS DIVIDENDS OR CASH SETTLEMENTS, THEY REPRESENT SECURITIES AND ARE SUBJECT TO THE OBLIGATION TO POST A PROSPECTUS.”
The stock tokens issued by Binance allow the traders to purchase as little as one-hundredth of a stock that is going to be represented by a digital token.
This is without even the requirement of purchasing all of it or hold a physical certificate of the stock.
In addition to this, it should also be known that the product was developed in alliance with the completely regulated investment group based in Munich, CM-Equity AG. The group also processes token dealings and Digital Assets AG, the asset tokenization platform based in Switzerland.
Binance in Response to The Scrutiny From Regulators
The leading cryptocurrency exchange, Binance released a statement in response to the examination from regulators saying that the tokens are an official product of CM-Equity.
It went further on mentioning that the product complies with the EU Union’s Mifid II market rules, as well as the banking regulations of BaFin.
Binance addressed the custody of acquired shares which are managed by CM-Equity, as well as compliance and KYC rules for the product, and argued:
“Currently, users only buy and sell tokens to and from CM-Equity AG, which does not require a prospectus.”
Pointing out the stock prices of the available tokens, Binance told that the prices of tokens of Tesla and Coinbase are settled in Binance USD instead of settling in fiat currencies.