The Federal Financial Supervisory Authority (BaFin) has warned Binance of a potential violation of securities laws when launching tokenized stock trading.
On April 12, the crypto exchange announced the launch of a new service.
Two weeks later, the Financial Times announced that regulators in the UK and Germany had checked its compliance with local legislation. Then Binance announced that the tokenized shares are processed by the regulated investment group CM-Equity and comply with the provisions of the second edition of the EU Markets in Financial Instruments Directive (MIFID II).
The BaFin document states that the tools are being implemented by Binance Germany GmbH & Co. According to the regulator, this firm offers "securities in the form of TSLA/BUSD, COIN/BUSD, and MSTR/BUSD tokens without the required plans on the website." BaFin stressed that CM-Equity is not mentioned in the marketing material.
“A public offering of securities without an approved prospectus is a violation of the EU Prospectus Regulation,” the regulator said.
BaFin did not specify what decision it will make regarding Binance but did cite potential penalties in such cases. - € 5 million or 3% of revenue for the last financial year. Also, the law allows for additional collection of double the amount of the profit received.