Media: European regulators to scrutinise Binance’s launch of tokenised stock trading

European regulators have begun examining Binance’s compliance with transparency and corporate-disclosure rules in launching tokenised share trading, Financial Times.

On 12 April, the cryptocurrency exchange announced the launch of a new service. It is available after completing a KYC procedure to all users, except residents of the United States, Turkey and China.

According to the publication, the UK Financial Conduct Authority is ‘studying the product and the rules that may apply to it’.

Germany’s Federal Financial Supervisory Authority declined to comment, citing confidentiality of information.

“If tokens can be transferred, sold and you can receive dividends or cash payments on them, they are securities. The obligation to publish a prospectus arises.”, the regulator added.

Binance told the Financial Times that tokenised shares are processed by the regulated investment group CM-Equity and comply with the provisions of the second edition of the EU Markets in Financial Instruments Directive (MiFID II).

CM-Equity confirmed this information. They stated that tokenised shares operate as a total return swap.

“Users buy and sell tokens through CM-Equity, which eliminates the requirement to publish a prospectus”, Binance explained.

According to the publication, product documentation states that CM-Equity is not responsible for custody of the acquired shares, nor for compliance with regulatory requirements and KYC checks.

In April 2021, Binance hired the former head of the Office of the Comptroller of the Currency in the U.S. Treasury, Brian Brooks, as head of Binance US.

In March this year, the staff of the bitcoin exchange was joined by former FATF officials and the former U.S. senator Max Bocus.

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