Cryptocurrency exchange Binance has stopped offering digital tokens tied to the value of listed equities, amid wider regulatory scrutiny of its business.
The tokens are often formatted as fractional units of shares in companies such as Tesla and Apple, which are then bought and sold on Binance’s website.
“Effective immediately, stock tokens are unavailable for purchase on Binance.com,” the exchange said in a 16 July blog post.
Support for stock tokens on Binance will be unavailable by mid-October, with users able to sell off their stakes over the next 90 days.
“As the crypto ecosystem evolves, and as Binance grows with the community, we are continually evaluating our products and working with our partners to meet our users’ needs,” the firm added.
Binance faced criticism from German banking regulator BaFin in April over its offering of stock tokens in Tesla, MicroStrategy and Coinbase, which warned consumers that the tokens likely violated local securities laws. If found liable, Binance could be hit with a fine of up to €5m or 3% of its total annual turnover.
The products were offered as part of a partnership with German firm CM-Equity AG, which will now provide the tokens on a new portal being developed for users based in the European Economic Area and Switzerland.
The move comes as Binance weathers further investigations across the globe from banking and finance watchdogs.
Regulators in the UK, Japan, Italy, Malta, the Cayman Islands, Thailand and Lithuania have all issued warnings against the exchange in the last two months for allegedly operating without authorisation.
Hong Kong’s Securities and Futures Commission also joined the growing chorus on 16 July, stating Binance was not authorised to carry out regulated activities in the city state.
Several UK banks, including NatWest, Santander, Barclays and Nationwide, have opted to block customer transactions to Binance or review their cryptocurrency policies as a result of the increased scrutiny.
Binance chief executive Changpeng ‘CZ’ Zhao said earlier this month that the firm plans to double the size of its compliance team this year in a bid to work better with watchdogs.
In the 16 July blog post, the exchange said it plans to “shift our commercial focus to other product offerings” going forward.
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