EU regulators are scrutinizing Binance for compliance with share laws.
Today it became known that one of the largest crypto-exchanges Binance has been under the close supervision of European regulators for a week already. This includes the British FCA. Together, they strive to understand whether the exchange adheres to the security rules when trading tokens.
Meanwhile, German regulator BaFin commented on the situation, stating that if tokens are transferred from one consumer to another, they can be traded and settled in cash, which means they are securities. Consequently, the party offering them is obliged to publish the prospectus. At the same time, the department refused to comment in any way on the information about the current check of the trading floor.
In the case of Germany, Binance offers users trading through the financial company CM-Equity, which is an organization controlled by local regulators. The firm itself reported that the activities of the cryptocurrency exchange meet all the requirements, and their product functions as a certificate for a total income swap. In response to the regulator's comment about the prospectus, CM-Equity stated that in this case it is not required, since the coins cannot be transferred to other customers, and the settlement is carried out in the BUSD stablecoin, without the participation of cash. Binance, in turn, stressed that trading on the exchange does not give the same voting rights that are present in the case of stocks. And given the fact that traders actually buy and sell tokens from CM-Equity, an issue prospectus is really not required.
In addition to Binance, the services of CM-Equity are also used by two other trading platforms FTX and Bittrex Global. However, it is not yet known whether regulators were interested in them when studying the trading processes of the Binance crypto exchange.
Another cause for concern for Binance may be the attention from the Hong Kong regulator, as yesterday the South China Morning Post said that the local authority may require the exchange to obtain a corresponding license as part of trading in Hong Kong, since Binance does not currently have one.