- German regulators said the Binance stock tokens could break securities laws.
- Binance Stock Tokens is a violation of Article 3 (1) of the EU Prospectus Regulation.
According to German regulators, the Binance stock tokens are a success. But this stock could break some security laws.
Recently, Germany’s Financial Supervisory Authority checked Binance’s offering of tokenized shares. The authority said that it doesn’t look too promising for Binance. As per the published report, the Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) thinks that Binance could be violating securities laws. This is due to Binance issuing tokenized stocks of firms like Tesla.
The BaFin report didn’t specify the securities that Binance offers or the companies’ products. However, BaFin said that Binance should have issued a scheme. Plus, Binance should have given all the data required by law to rule out violations. Only after that could Binance legally offer the tokenized shares.
The regulators said that Binance stock tokens is a violation of Article 3 (1) of the EU Prospectus Regulation. If this were the case, the fines could be pretty heavy for Binance.
Further, BaFin noted that under Section 24 paragraph 3 No. 1 WpPG, a breach of the prospectus duty is an official offense. Besides, a fine of up to 5 million euros can be the penalty. This means 3% of the total turnover of the last financial year following Section 24, paragraph 6 of the WpPG. Fines can also be up to twice the economic benefit of the infringement.
Germany is not the first country to have an opinion about Binance’s stock tokens. Others including UK regulators and Hong Kong authorities also began to express their views as well.