Stocks tokenized and represented by digital currencies are a new trend in the crypto arena.

As the leading trading platforms provide trading of shares of global companies listed on the stock exchange in the form of cryptocurrencies, these digital currencies are based on their value and movement on the original movement of the stock.

Recently, Binance announced the inclusion of several global stock currencies, but it seems that this did not appeal to the German Financial Supervisory Authority.

The German Financial Supervisory Authority is currently investigating Binance for its exposure of stock coins.

According to a legal opinion published on the official website of the German Financial Supervisory Authority, Binance will violate securities laws by issuing shares of publicly traded companies such as Tesla, regardless of whether they are exchanged on the blockchain or not.

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Regulations and Equity Currencies

A stock currency is a cryptocurrency that represents the stock of a company.

Meaning, it is theoretically backed 1:1 by real shares bought by Binance.

These stock cryptocurrencies behave similarly to common stocks, paying dividends in cryptocurrencies in the same way as a common stock.

In very simple terms, these stock cryptocurrencies operate in exactly the same way as a common stock, except that the underlying asset is a share rather than money.

Bittrex and FTX already offer support for equity currencies.

The BaFin statement did not distinguish between securities offered by traditional institutions and a product offered by Binance.

The German Financial Supervisory Authority argues that Binance had to notify regulators and comply with all necessary procedures to introduce the securities to the German market.

costly error:

In particular, the German financial watchdog BaFin clarifies that Binance should have published a prospectus with all the information required by law to exclude fraud and legal violations.

After the content of this prospectus has been evaluated and approved by regulators, Binance will be legally authorized to offer crypto-tokenized shares.

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What is stated in statement German Financial Supervisory Authority:

BaFin has reasonable suspicion that “Binance Deutschland GmbH & Co. KG” in Germany offers securities in the form of share tokens with the designations TSLA/BUSD, COIN/BUSD and MSTR/BUSD to the public without the necessary prospectuses on the website

According to the German Financial Supervisory Authority, Binance’s decision to offer popular stock coins is a violation of Article 3(1) of the EU Regulation on Initial Offerings.

If this is the case, the fines can be very heavy on Binance, as they are calculated on the basis of the company’s total profits, not just on the profit obtained from trading stock currencies.

Pursuant to Section 24 Para 3 No. 1 WpPG, breach of prospectus obligation constitutes an administrative offense and may be punishable by a fine of up to €5 million or 3 per cent of the total sales of the last financial year pursuant to Section 24 Paragraph 6 of WpPG.

Share coins offered by Binance are the target of regulators around the world:

Germany is not the first country to issue an unfavorable opinion regarding the stock coins offered by Binance.

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Just last week, UK authorities revealed that they are working to understand the legal nature of equity currencies and determine whether they are securities.

In the event that legal standards deem crypto-tokenized shares to be securities, Binance will also have to face the consequences in the UK.

According to information from the “South China Morning Post”, the Hong Kong authorities could have a similar scenario.

This latest regulatory pressure presents a new obstacle for Binance, which recently bet on expanding its services, offering shares tokenized in new cryptocurrencies that represent Coinbase, Microstrategy, Apple and Microsoft.

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