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The cryptocurrency exchange, Binance launched its share token offering last week and is therefore under the watch of the European regulators, according to reports,
UK’s Financial Times reported on Thursday that European regulators, including the British Financial Conduct Authority (FCA), are checking whether Binance is complying with security rules before carrying out share token trading.
The FCA told the Financial Times that it is working with Binance to understand the product, applicable regulations and sales. The regulator further stated that “firms and their senior management teams are responsible for determining whether their products and services fall within the remit of the FCA.”
German financial regulator, BaFin declined to comment on a possible review at the Financial Time but stated that the tokens, if transferable, can be traded on cryptocurrency exchanges, distribute dividends and can be settled in cash, represent securities. The company that made them available must also publish a prospectus.
Binance offers trading in stock exchange tokens through the regulated German financial services company CM-Equity. CM-Equity informed the Financial Times that the product complies with the regulations and can be used as evidence of the total return swap.
The company further stated that no prospectus is required as the tokens are not transferable to other customers but are settled in Binance’s own stable currency BUSD instead of cash.
Binance, on the other hand, stated that share brands do not confer equal voting rights on equity. The exchange stated that no prospectus is required as traders can buy and sell stock brands between CM-Equity.
Binance’s competitors FTX and Bittrex Global also offer trading in share tokens via CM-Equity. It’s not clear whether these two cryptocurrency exchanges are also being scrutinized by European regulators. This obstacle has been linked to FTX and Bittrex Global.
Another report indicated that Binance may also be under scrutiny by Hong Kong regulators. The South China Morning Post reported on Wednesday that Binance is selling its equity products in Hong Kong. This activity can be considered a regulated activity that requires a license in Hong Kong. However, according to the report, Binance has no such licenses in Hong Kong, according to regulatory records.