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Currently, it is not clear what the UK’s Financial Conduct Authority will see fit for the new Binance tradable stock tokens services.
The UK’s Financial Conduct Authority speaking to the Financial Times noted that it is working with cryptocurrency exchange Binance to understand its latest services that entail Tradable Stock Tokens. Reportedly, the regulator wants to understand the regulations that may apply to it and also how the firm markets the new feature.
Speaking to the FT, the regulator said that it is “working with the firm to understand the product, the regulations that may apply to it and how it is marketed”. Additionally, the regulator noted that the “firms and their senior management teams are responsible for determining whether their products and services fall within the remit of the FCA”.
Notably, the news outlet also talked to the German regulators who declined to comment on any private matter. “We cannot comment on the specific case due to confidentiality obligations. Fundamentally, however, the following applies: if tokens are transferable, can be traded at a crypto exchange and are equipped with economic entitlements like dividends or cash settlements, they represent securities and are subject to the obligation to publish a prospectus,” the German regulator noted.
Bigger Picture on UK’s Financial Conduct Authority Investigations on Binance
Binance, the largest cryptocurrency exchange by traded volume and ecosystem growth, recently unveiled a zero commission tradable stock token. Initially, the firm only listed Tesla Inc (NASDAQ: TSLA) stocks, whereby it later added the recently launched Coinbase Global Inc (NASDAQ: COIN) stocks. According to Binance, each stock token that is provided through its system will represent one share of equity stock. Additionally, the firm noted that the tradable stock tokens are “fully backed by shares stored in a depository portfolio of underlying securities, in cooperation with investment firm CM-Equity AG and asset tokenization platform Digital Assets AG.”
On its defense, Binance noted that the tradable-stock tokens are a CM-Equity product that is compliant with the European Union’s Mifid II markets rules and also BaFin’s banking regulations. “Currently users only buy and sell the tokens from and to CM-Equity AG, which does not require a prospectus,” Binance said.
During the launch date, Binance Chief Executive Officer Changpeng Zhao alias ‘CZ’ said that the “Stock tokens demonstrate how we can democratize value transfer more seamlessly, reduce friction and costs to accessibility, without compromising on compliance or security.” Further, added that “Through connecting traditional and crypto markets, we are building another technological bridge for a more inclusive financial future.”
Currently, it is not clear what the UK’s Financial Conduct Authority will see fit for the new Binance tradable stock tokens services. Binance Coin is up approximately 1.1% in the past 24-hours and over 3659% in the past year. However, there is a minimal connection to the BNB than to its stablecoin BUSD as it might lack notable volume in the future if found against the law.