According to news in the financial press, European securities regulators are investigating cryptocurrency exchange Binance over concerns that its latest token launch is a stock token offering.
According to the Financial Times, European regulators, including the UK’s Financial Conduct Authority (FCA), looked into whether the project was done in line with securities laws before it was made available for sale.
The FCA responded by confirming that it was working closely with Binance to capture the meaning of its token offer better and decide which regulations should apply.
“ firms and their senior management teams are responsible for determining whether their products and services fall within the remit of the FCA. ”, the agency said in a reminder to other businesses.
Their German counterparts at BaFin have declined to comment directly on the Binance issue. Still, they have stated that tokens are securities if they are transferable, tradeable on digital currency exchange, pay dividends, and settled for cash, all of which could apply to the Binance offering.
If this is to be the case, Binance would be required to publish a prospectus and comply with a slew of other securities laws.
The Binance tokens remained arranged through CM-Equity, a controlled body that ensured the tokens were compliant and could use as certificates for a complete return swap.
There are also signs that Binance could face regulatory scrutiny in Hong Kong over the issuance, with its token marketing campaign viewed as a potentially controlled operation.
As a result, it will necessitate a Hong Kong government license, which Binance does not currently possess, according to public records.
It will be essential to see whether regulators intensify their opposition to the issuance and take some compliance action against the company.