Binance Pulls Plug on Digital Stocks Amid Regulatory Scrutiny

Binance Holdings Ltd., the world’s largest cryptocurrency exchange operator, said it would stop offering digital tokens tied to stocks like Apple Inc. and

Tesla Inc.

TSLA -0.78%

after regulators in multiple countries raised concerns about the products.

Stock tokens will be unavailable for purchase on Binance effective immediately, the crypto exchange said on its website Friday.  Customers who own the tokens may sell them over the next 90 days, and Binance will cease to support the products on Oct. 14, the exchange said.

“We believe that shifting our commercial focus to other product offerings will better serve our users for the long term,” a Binance spokesperson said.

Binance’s move came as regulators around the world have stepped up pressure on the crypto exchange. Some of the agencies have singled out Binance’s stock tokens for appearing to violate local securities regulations.

Hong Kong’s markets regulator on Friday became the latest regulatory body to warn investors about Binance’s stock tokens.

“Investors are urged to be extremely careful if they plan to invest in Stock Tokens offered on unregulated platforms,” Hong Kong’s Securities and Futures Commission said in a statement.

Stock tokens are likely to be defined as securities under the territory’s laws, which means only licensed firms may market or distribute them, the commission said. Binance isn’t licensed to conduct regulated financial activities in Hong Kong, it said.

Italian stock-market regulator Consob issued a similar warning on Thursday. Consob said in a statement that Binance wasn’t authorized to provide investment services in Italy, citing the crypto exchange’s offerings of stock tokens and derivatives.

Earlier this week, Binance founder

Changpeng Zhao

said in an open letter that the exchange operator was expanding its compliance team. “We are committed to being compliant with appropriate local rules wherever we operate,” he said.

Regulators in Poland and Lithuania also issued warnings about Binance in recent days, following similar warnings from U.K. and Japanese authorities in June.

Germany’s market watchdog, BaFin, said in April that an affiliate of Binance may have violated securities laws by issuing stock tokens while failing to publish prospectuses on the securities offerings that BaFin could review.

Binance introduced stock tokens in April, starting with one linked to Tesla. Binance said the tokens were backed by a portfolio of underlying securities held by CM-Equity AG, a German financial firm. The exchange made the tokens off limits to U.S. investors, who are generally blocked from trading on Binance’s main overseas marketplace.

Founded in 2017, Binance is the world’s largest crypto exchange by trading volume, handling tens of billions of dollars of transactions a day.

Much of that volume is in cryptocurrency derivatives—risky instruments that allow traders to bet on whether different coins will rise or fall in value. Some regulators, such as the U.K.’s Financial Conduct Authority, cited derivatives in their recent warnings about Binance.

Binance was founded in China but now says it has no official headquarters.

Write to Alexander Osipovich at

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Binance Pulls Plug on Digital Stocks Amid Regulatory Scrutiny Source link Binance Pulls Plug on Digital Stocks Amid Regulatory Scrutiny

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