Binance drops ‘stock tokens’ as global crackdown intensifies

LONDON, July 16 (Reuters) – Binance on Friday said it had stopped selling digital tokens linked to equities, as the Hong Kong financial watchdog became the latest in a series of regulators to crack down on offers of “stock tokens “of the cryptocurrency exchange platform.

Market tokens are digital versions of shares indexed to the value of the relevant share. They are usually bought and sold in fractions of units, unlike traditional stocks.

“As of today, exchange tokens are not available for purchase on Binance.com,” the exchange said on its website, adding that it would cease all support for the products in October.

The global review of the cryptocurrency industry has intensified amid concerns over lax consumer protection and the use of digital coins for money laundering, with authorities focusing in recent months on Binance, the one of the biggest platforms in the world.

Hong Kong’s Securities and Futures Commission (SFC) said after Binance’s decision that the exchange was not allowed to conduct regulated activities in the city. Offering stock tokens to the Hong Kong public without permission could be an offense, he added. Read more

“Anyone who violates a relevant provision can be prosecuted and, if found guilty, subject to criminal penalties,” the SFC said.

A Binance spokesperson declined to comment on the SFC’s decision, which came a day after Italian regulators made a similar announcement.

Binance currently has no foreign exchange trading in Hong Kong and takes its legal obligations seriously, the spokesperson added.

It was not immediately clear whether global regulators coordinated their moves, which created unprecedented global pressure on a large cryptocurrency firm.

Binance, the world’s largest exchange in terms of spot trading volumes last month, offers a wide range of services to users, from spot trading of cryptocurrency and derivatives to digital wallets and stock tokens.

It offered tokens to companies such as Apple Inc (AAPL.O), Microsoft Corp (MSFT.O) and Tesla Inc (TSLA.O).

Later on Friday, Lithuania’s central bank said it had warned Binance against its “unlicensed investment services”. Consumers risk losing all of their investments in crypto-asset related services, he said.

GLOBAL REPRESSION

Regulators in Britain, Germany, Japan and other countries have stepped up warnings about Binance, with the United States also investigating the exchange. Read more

The Italian market watchdog said on Thursday that Binance was not authorized to provide investment services and activities in the country. Its website offered product information in Italian, including stock tokens. Read more

Britain’s Financial Conduct Authority (FCA), which said last month that Binance could not conduct regulated activities, declined to say whether it had been in contact with other regulators.

The FCA regularly cooperates and shares information with regulators around the world on a range of issues, a spokesperson said.

BaFin, the German regulator, said in April that Binance risked being fined for offering stock tokens without publishing a prospectus for investors. Read more

Binance users holding exchange tokens can sell or hold them for the next 90 days, the exchange said, but will no longer be able to sell or close positions after October 14.

“We believe that shifting our business focus to other product offerings will serve our users better, and we are committed to making this transition as easy as possible for those affected,” a Binance spokesperson said.

Reporting by Tom Wilson; Editing by Rachel Armstrong, John Stonestreet and Catherine Evans

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