Binance discontinues trading with tokenized shares

It was only in April that Binance began offering trading in popular stocks such as Tesla, Apple and Microsoft as tokens. This has now already come to an end again as of mid-October.

In the spring of 2021, Binance was still convinced that it could attractively expand its portfolio by trading in tokenized shares. The securities of Tesla made the start, followed later by Apple, Microsoft, MicroStrategy and Coinbase. Now, Binance customers who have taken advantage of this offer must take action. Because as of October 14, the trading venue for tokenized shares on Binance will be closed. Purchases are already no longer possible, according to a statement. Until October 14, open positions are to be closed individually, otherwise Binance itself will settle on October 15 according to then current market prices.

According to Binance, the decision has been made against the continuation of so-called stock tokens as part of the continuous reviewed range of offers. But in Germany, the Federal Financial Supervisory Authority (Bundesanstalt für
Finanzdienstleistungsaufsicht (BaFin) had already published a warning notice at the end of April, warning that Binance was violating the prospectus requirement for securities in its offering. This also likely influenced Binance’s move, as the crypto exchange has been trying to proactively avoid potential conflicts with regulators for weeks. In purely economic terms, he trading of stock tokens at Binance had remained a niche business, with turnover rarely reaching the million mark per day.

One detail remains interesting: Binance cooperated with CM Equity AG from Munich and Digital Assets AG from Switzerland for the tokenized shares. CM Equity AG now wants to organize a trading venue for stock tokens on its own and will thereby probably make it possible to transfer portfolios from Binance to it at the beginning of October, it is said. Piquantly, CM Equity AG also cooperates with the crypto exchange FTX, where so far stock tokens remain on offer. Whether FTX will also stop trading shares represented as tokens for German and EU customers remains open so far.

Conclusion: Stock trading 2.0 – a market with prospects

In the U.S., the fintech company Robinhood has had a lot of success with stock trading via app, while in the EU, eToro and Revolut, for example, are known for such offerings. With low fees and the ability to buy and sell even hundredths of a share, providers are tapping into new customer bases. Thus, it is to be expected that service providers such as CM Equity AG will continue to work on placing stock tokens in compliance with the law. Only Binance is out of stock trading 2.0 for the moment, but could make a new attempt at a later date.

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