Binance Warned Over Tokenized Stocks

  • BaFin has warned Binance that it is illegally offering tokenized shares
  • Binance this week added three companies to its offer, but the German regulator says it has done so illegally
  • Binance should have added a prospectus to its offering

The German financial regulator, BaFin, has warned Binance that it risks being fined for not launching its tokenized shares in the correct manner. According to Reuters, BaFin yesterday said that the exchange should have published an investor prospectus prior to the launch, and that its failure to do so put it afoul of European financial laws. If found guilty, the exchange could face a fine of up to €5 million.

Binance Expands its Tokenized Share Offering

Binance announced its new raft of tokenized assets on Monday, with Apple, MicroStrategy, and Microsoft adding to the initial listings of Coinbase and Tesla last week. These tokenized stocks are something that has been mooted for a long time in the crypto world, and indeed is something already available on other exchanges such as FTX, but it seems that Binance may not have done their homework properly.

BaFin issued the warning on Wednesday, saying that the apparent lack of a prospectus for the MicroStrategy, Tesla and Coinbase issuance was a violation of European Union securities law. This could, in theory, result in Binance, as issuer, being fined €5 million ($6 million) or 3% of last year’s turnover:

BaFin has grounds to suspect that Binance Germany is selling shares in Germany in the form of ‘share tokens’ without offering the necessary prospectuses. Please bear in mind that securities investments should only ever be carried out on the basis of the necessary information.

Extreme Measures Unlikely

Binance has yet to comment on the suggestions that it has improperly added the tokenized shares, but it is unlikely that a fine of that magnitude will be levied, given that all they need to do is the correct documentation around the offer.

Originally published at on April 29, 2021.




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