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Germany’s financial regulator is warning that Binance risks being fined for offering its tokenized stocks without filing a prospectus before offering the assets. The regulator said in a statement,
"BaFin has grounds to suspect that Binance Germany is selling shares in Germany in the form of 'share tokens' without offering the necessary prospectuses." "Please bear in mind that securities investments should only ever be carried out on the basis of the necessary information.”Earlier this year, the leading stock exchange announced the launch of zero-commission stock trading, starting with Tesla (TSLA). Binance then announced the listing of competitor Coinbase’s COIN shares, and then this Monday, MicroStrategy (MSTR) joined Apple (AAPL) and Microsoft (MSFT) on the platform. These “stock tokens” are denominated in the exchange’s own stablecoin BUSD. The Federal Financial Supervisory Authority (BaFin) said this week that there is no prospectus on the exchange’s website for MicroStrategy, Tesla, and Coinbase issues, which is a violation of European Union securities law. The violation can result in Binance being fined 5 million euros ($6 million). A spokesperson for the UK's financial watchdog said,
“The firm offers a number of regulated and unregulated products and services across multiple jurisdictions ... We are working with the firm to understand the product, the regulations that may apply to it, and how it is marketed.”The synthetic shares, backed by actual stock, allow investors to reap the economic gains of a company’s stock performance and dividends, according to Binance. A Binance spokesperson said,
“Binance takes its compliance obligations very seriously and is committed to following local regulator requirements wherever we operate. We will work with regulators to address any questions they may have.”