The financial supervisory authority has said in an announcement on Wednesday that these tokens that track the movement of shares in Tesla, Coinbase and MicroStrategy have been identified as suspicious, and require a prospectus that was not issued prior to trading.
You may be familiar with these stock tokens that allow Binance customers to purchase as little as one-hundredth of a regular share using Binance USD (BUSD), which is a US dollar stablecoin issued by the exchange.
BaFin said that the cryptocurrency exchange has violated the prospectus obligation under Article 3 Paragraph 1 of the European Prospectus Regulation.
This violation constitutes an administrative offense, and the exchange could, therefore, be fined.
A fine of up to $6 million is being thrown around as punishment, which is about 3% of the annual revenue of what is the biggest cryptocurrency exchange in the world in terms of volume.
This is not the only place where these red flags have been raised.
Hong Kong law firms also expressed concerns surrounding this new product that Binance launched earlier this month. While in the UK, the Financial Conduct Authority is working with the firm to understand the product, how it is marketed, and the regulations that may apply.
Expect more on this, real soon.
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