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Binance users who already hold stock tokens will have 90 days to sell them off.
Barely three months after announcing support for stock tokens, crypto exchange firm, Binance has said the platform will no longer provide support for the securities-based tokens.
“Effective immediately, stock tokens are unavailable for purchase on Binance.com,” the exchange posted on its website. It also added that support will end by October 14.
What Are Stock Tokens?
Stock tokens are digital equities with equivalent share values. They were first offered in April. It allowed Binance users to buy shares in major companies including Tesla, Coinbase, MicroStrategy, Microsoft, and Apple. Investing in these securitized tokens allowed traders to save money on the transactions. This was possible because Binance did not charge any commission on the token transactions.
Unfortunately, not long after the offering, financial regulators of the United Kingdom and Germany expressed concern that the offering was violating their regulatory laws. The German regulator, BaFin, particularly noted that it could fine the crypto exchange for offering stock tokens without an investor prospectus. In its defense, Binance stated the tokens did not violate any law as it complied with the second directive of the European Union and the banking requirements of BaFin.
More recently, the exchange came under the scrutiny of Italian regulators. The Italian regulatory body had stated on Thursday that Binance was not licensed to provide investment services in Italy, even if it was only doing so through its website (Previously, the Binance website offered information to Italians on derivatives and stock tokens).
What If You Already Have Them?
The implication of this announcement is that Binance users who already hold stock tokens will have 90 days to sell them off. Till then, residents of the European Economic Area could transfer any open positions to the token provider. Failing to do this, all open positions will be automatically closed by October 15. As a reason for stopping support, Binance stated that the move was so it could better focus on its other product offerings.
The tokenized shares are still available on the FTX exchange, which also offers them in collaboration with CM-Equity AG.