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The German financial watchdog has warned investors that Binance, one of the world’s largest cryptocurrency exchanges, has probably violated securities rules when trading stock tokens in the face of an attack by the cryptocurrency industry on highly regulated markets.
He has published a BaFin based in Bonn a note the tokens that follow the movement of Tesla, Coinbase and MicroStrategy shares on its website on Wednesday evening indicate that they are values that still need a prospectus issued.
BaFin has stated that this offense could result in a fine of up to 5 million euros or a fine of up to 3 per cent of the issuer’s final annual income. The issuer may be liable for losses for investors.
The guardian has the legal power to prohibit the sale of securities.
His move comes after the Financial Times he reported last week European financial regulators were considering launching a launch service for Binance, using products that use a German broker as an intermediary for investors to trade portions of shares. Since last week’s report, Binance has expanded its stock program to include other stocks like Apple.
BaFin’s backlash underscores the challenge facing authorities in deciding how to oversee businesses that specialize in cryptocurrencies like bitcoin and ethereum when they enter highly regulated markets like equity.
At the time of the launch of the fiscal, earlier this month, CEO Changpeng Zhao said that “they demonstrate how we can democratize the transfer of value in a more democratic way.” In a recent interview with Bloomberg, he said his business is “highly regulated”.
Binance did not immediately respond to a request for comment on BaFin’s statement.
The rising prices of digital currencies and the high 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 claims to be the largest cryptocurrency exchange in the world in terms of volume, allows users to market a full range of cryptocurrency derivatives, including futures and opportunities.
In the marketing material, he said that each token represents a “shareholding in a joint stock company” and provides an “economic return” to the owner of those shares. The tokens are bought and sold using Binance’s cryptocurrency, and Binance said a German team, CM-Equity, is responsible for managing services such as the custody of acquired shares, as well as compliance and performing checks on your clients. He was not named in a statement from BaFin on Wednesday.
Binance says it has no formal headquarters, but has subsidiaries that are 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] the product, the applicable regulations and how it is marketed ”.
The exchange’s token trading platform was still available on Wednesday evening via UK and German Internet protocol addresses. Binance’s main stock token trading website said only residents listed in China, the US and Turkey are prohibited from using the service.
Bitcoin has fallen by about $ 10,000 from a record high of more than $ 64,000 earlier this month, with concerns about the potential for new regulations to remove sentiment. Turkey, home to a large and active cryptocurrency market, banned the use of digital coins to buy goods and services on 16 April. extensive research in various local exchanges.
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