Binance Lets Customers Move Stock Tokens Before Service Shuts Down

Crypto exchange Binance is allowing European customers to migrate their tokenized stocks to another company. Binance suddenly shut down its tokenized stock service in July after several regulators said the tokens likely constituted illegal securities offerings.

Customers in the European Economic Area and Switzerland can now migrate tokenized stock from Binance to CM-Equity AG, the German investment firm that Binance had partnered with to list the tokenized stocks. 

Customers from other nations, such as the United Kingdom, cannot migrate tokens to CM-Equity AG. They can sell them on Binance up until October 14. If customers do not sell the tokens or move them to CM-Equity AG’s platform, Binance will sell the tokens for them on October 15.

Tokenized stocks are cryptocurrency derivatives that track the value of securities. In Binance’s case, CM-Equity operated as the broker; it sold tokenized, fractionalized of stocks it owned to Binance’s customers. Unlike regular stocks, Binance’s tokenized stocks did not pay dividends to customers, who also had no shareholder voting rights. 

Binance launched tokenized stocks on April 12, two days before crypto exchange Coinbase was listed on the Nasdaq. Binance listed Coinbase stock on the day of the listing and also sold tokenized equity in companies such as Tesla, Apple and Microsoft. 

In mid-July, Binance ceased tokenized stock trading without warning. Customers couldn’t buy new stock tokens and Binance said it wouldn’t support the tokens at all after October 14. CM-Equity still operates similar services on FTX and Bittrex.

Binance said it halted the offering to focus “on other product offerings,” but a few hours earlier, Hong Kong’s Securities and Futures Commission warned consumers that Binance is not “licensed or registered” to offer tokenized stocks, which it said are “likely to be securities” under Hong Kong law. 

The day before, Italy’s financial regulator referenced stock tokens in a notice that said Binance can’t operate in the country. In April, Germany’s financial regulator had said that they had “reasonable grounds” to believe that these stock tokens violated securities laws, and the UK’s financial regulator is investigating the matter. 

3 October 2021 13:47