- Binance gives existing token holders a 90 day time period to liquidate their stock token holdings.
- The sudden closure of stock token services comes amid a rising regulatory backlash against Binance.
On Friday, July 16, crypto exchange Binance announced that it will discontinue its stock tokens service launched earlier in April 2021. Thus, effective immediately, users can no longer buy stock tokens on Binance.com.
On the other hand, Binance is giving a three-month time frame for existing token holders to liquidate their holdings. So if users fail to sell these stock tokens by October 14, Binance shall liquidate them after October 15.
Binance started its stock tokens service in April allowing users to buy a fraction of the stocks traded on Wall Street. Users can buy a fraction of the stocks in some of the top companies that have taken interest in cryptocurrencies such as Tesla and Coinbase. This was a good attempt in bridging the gap between the traditional stock market and the crypto market.
The sudden discontinuation by finance is not surprising considering the regulatory backlash it is facing. Back in April, Binance already received regulatory warnings on floating this stock tokens service. Germany’s BaFin and regulators in the U.K. had warned Binance of violating industry rules.
In the official announcement, Binance said this decision comes in the wake of shifting “commercial focus to other product offerings”. It hasn’t specifically mentioned any regulatory action in this regard.
Italy and Hong Kong regulators issue warning
Trouble for Binance seems to brew further in other parts of the world. On Thursday, July 15, Italy’s financial regulator CONSOB said Binance isn’t authorized to provide financial investments in the country. “Companies of the Binance Group are not authorized to provide investment services and activities in Italy,” said CONSOB.
Last month, CONSOB released a warning on the unsupervised spread of crypto. Thus, it warned investors to “adopt the utmost caution” while dealing with digital assets. In another development, Hong Kong’s Securities and Futures Commission (SFC) was the latest to issue a warning against the exchange.
HONG KONG'S SFC SAYS NO ENTITY IN THE BINANCE GROUP IS LICENSED OR REGISTERED TO CONDUCT "REGULATED ACTIVITY" IN HONG KONG
— *Walter Bloomberg (@DeItaone) July 16, 2021
It looks like regulators across the world are not happy with the way Binance is operating. The crypto exchange first moved its operations out of China back in 2017. Since then, Binance has been shifting base from one country to another.
The fact that Binance doesn’t have a global headquarter is more concerning for the regulators. It all started with U.K’s FCA issuing the first warning to Binance last month in June. Since then, regulators from around the world including Thailand, Japan, Canada, and Singapore have warned Binance of operating without a license.