Earlier today, crypto exchange Binance announced that it will no longer offer trading of stock tokens. The move came as several regulators, including those from Germany and Hong Kong, have warned about the exchange's stock tokens trading offering.
As previously reported, a Binance spokesperson told The Block that "shifting our commercial focus to other product offerings will better serve our users," and hence, the exchange decided to stop the stock tokens trading service.
Now Michael Kott, founder and CEO of CM-Equity AG, a 19-year-old German financial services firm through which Binance offered the service, also tells The Block that it was simply a business decision.
"Binance did not [have] to cease this, and I can ensure you nobody forced them," said Kott. "They decided to do so to focus on other crypto-related products, which is their main business."
Stock tokens, also known as tokenized stocks, are blockchain-based shares of publicly traded companies. Binance launched its stock tokens trading service in April of this year, although it didn't appear to gain much traction. The total trading volume of Binance's five stock tokens offering — Apple, Coinbase, Microsoft, MicroStrategy, and Tesla — was only around $1 million at the time of writing.
Other exchanges offering stock tokens
One question that lingers is why have several regulators issued warnings against Binance's stock token offering and not against FTX and Bittrex Global, which offer similar services also via CM-Equity?
On that question, Kott said he would also like to know the answer. He said CM-Equity is a "fully regulated financial institute" and that the stock tokens offering is also "fully compliant with German and European Financial Market Regulation."
When asked if Binance's stock tokens offering was different from FTX and Bittrex Global, Kott said their services are "identical" but are just named differently.
FTX and Bittrex Global are "happy with this product," said Kott, adding that these exchanges have "different market views and approaches that bring them to different business decisions."
CM-Equity itself is setting up its own stock tokens trading portal for residents of the European Economic Area and Switzerland. Binance today said its users in these regions could utilize that portal once launched.
"Those users may transition their stock token balances to CM-Equity AG once its new portal is established," said Binance. "The portal is scheduled to be open approximately two-to-four weeks before 2021-10-15 (UTC), and additional KYC measures will be requested by CM-Equity AG to complete the transition."
Binance has been at the center of global regulatory attention in recent weeks. Government agencies in the U.S, the U.K., Italy, Japan, Thailand, Poland, and the Cayman Islands, have all either issued warnings or taken action against the exchange recently.
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