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The German financial watchdog has warned investors that Binance, one of the world’s largest cryptocurrency exchanges, has likely breached securities rules during its launch of securities trading, in a crackdown on the cryptocurrency industry. in highly regulated markets.
Published BaFin based in Bonn a note on Wednesday afternoon on its website, stating that tokens following the Tesla, Coinbase and MicroStrategy stock movement represent securities that require a brochure that has not yet been issued.
BaFin points out that this infraction represents a criminal offense that can be sanctioned with a fine of up to 5 million euros or 3 percent of the issuer’s last annual income. The issuer may be liable for losses of investors.
The watchdog also has the legal power to prohibit the sale of securities.
His step comes after the Financial Times was reported last week that European financial regulators were considering launching a Binance service to allow investors to trade stock fractions through products that use a German broker as an intermediary. Since last week’s report, Binance has expanded its stock program to include other stocks like Apple.
BaFin’s downturn underscores the challenge authorities face when deciding how to oversee cryptocurrency companies, such as bitcoin and ethereum, when entering highly regulated markets such as stocks.
At the time of the listing of tokens earlier this month, Executive Chairman Changpeng Zhao said they “demonstrate how we can democratize value transfer more smoothly.” In a recent interview with Bloomberg, he described his business as “highly regulated.”
Binance did not immediately respond to a request for comment on BaFin’s statement.
The rising prices of digital currencies and the great interest of retail investors in stock trading have encouraged cryptocurrency exchanges to explore new products that mimic those found in the traditional financial industry. Binance, which is said to be the world’s largest cryptocurrency exchange by volume, allows its users to trade a full set of cryptocurrency derivatives, including futures and options.
In the marketing material, he said that each witness represents a “participation in a corporation” and provides the “economic returns” of owning such shares. The tokens are bought and sold using Binance’s cryptocurrency, and Binance said a German group, CM-Equity, is responsible for managing services such as custody of acquired shares, as well as compliance checks and customer knowledge. . He was not named in BaFin’s statement Wednesday.
Binance says it has no formal headquarters, but that it has subsidiaries registered with regulators in countries like the UK. The UK Financial Conduct Authority told FT last week that it is “working with the company to understand this” [tokens] product, the regulations that can be applied to it and how it is marketed ”.
The stock exchange listing trading platform was still accessible Wednesday afternoon via Internet protocol addresses in the UK and Germany. Binance’s major stock trading website said only countries in China, the United States and Turkey that had a list of banned vehicles used the service.
Bitcoin has fallen about $ 10,000 from its record high above the $ 64,000 reached earlier this month, with concerns about the potential for new regulations to affect sentiment. On April 16, Turkey, home to a large and active cryptocurrency market, banned the use of digital currencies to buy goods and services. extensive research to various local exchanges.
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