Germany’s Federal Financial Supervisory Authority (BaFin) warned yesterday, April 28, that cryptocurrency exchange Binance may have to pay a fine for launching share tokens without a prospectus for investors.
As reported by this media outlet, Binance launched fractional share tokens for Apple, MicroStrategy and Microsoft on Monday this week, in addition to the tokens for Coinbase and Tesla that were already operating.
The German regulator pointed out that Binance’s failure to publish a prospectus on the exchange’s website represents a violation of the European Union (EU) Securities Law. This could see the popular cryptocurrency exchange face a fine of 5 million euros , which is equivalent to $ 6 million or 3% of the turnover it recorded during 2020.
The government entity pointed out on this issue, that “investments in securities should only be carried out on the basis of the necessary information.”
BaFin has reason to suspect that Binance is selling shares in Germany in the form of “share tokens” without offering the necessary prospectuses.
Tradable share tokens are a new type of asset that Binance has been offering to users of its platform since last April 12. These are tokens backed by shares of companies listed on the stock exchange, which the exchange allows to acquire in fractions .
This action seems to start a trend and has already been copied in Latin America by the Argentine exchange Decrypto. This exchange recently launched tokens representing the shares of Google, Apple and Microsoft, among others.
Binance agrees to follow BaFin’s requirements
Jessica Jung, Binance’s Global Head of Public Relations, said the exchange intends to comply with its various jurisdictional regulatory requirements, and will take steps to remedy the matter.
The executive assured that “Binance takes its compliance obligations very seriously and is committed to following the requirements of the local regulator wherever it operates.” “We will work with regulators to address any questions they may have,” he added.
Other European regulators also have their sights set on Binance’s tokenized shares, as CriptoNoticias recently reported.
Days ago, BaFin had said that “if the tokens are transferable, can be traded on a cryptocurrency exchange, provide dividends and are settled in cash, they could be classified as securities (security).” BaFin therefore considers that the companies that offer them should publish a prospectus as if they were traditional shares.