Binance suspends stock tokens after strict regulatory oversight

• Binance announced that it is winding down its support for stock tokens.
• The exchange has given traders from the European Economic Area (EEA) the option to migrate positions onto the CM-Equity AG portal.
• Citing a shift in its commercial focus, the digital asset trading platform claims that it is working on different product offerings.

Binance has suspended the purchase of stock tokens, effective immediately. The exchange has advised users to exit positions on or before 2021-10-14 19:55 (UTC). 

Binance pulls support for stock tokens, regulatory pressure on the rise

Stock tokens are financial instruments that trade on traditional stock exchanges. The value of these digital assets is pegged to the worth of the relevant underlying share. They are essentially non-fungible over-the-counter derivatives and do not represent the share itself. 

All stock tokens listed on Binance.com are products issued and sold by CM-Equity AG, a German Financial Company. The trading platform has given traders from the EEA and the ones from Switzerland the option to shift their stock tokens onto the CM-Equity portal. The remaining traders are expected to close their positions before the end of the 90-day period. 

In its trading service agreement, Binance had clearly stated that: 

Binance.com reserves the right to suspend or terminate Binance stock tokens trading service without notice. If necessary, Binance.com has the right to suspend and terminate Binance stock tokens trading service at any time.

Binance has exercised this clause and traders are now solely responsible and liable for managing their stock token exposure and the risk it entails. All positions that remain open after 2021-10-14 19:55 (UTC) will be closed at 2021-10-15 13:30 (UTC) based on actual executed prices after the market opens for trading on the same day. 

The world’s largest cryptocurrency exchange is suspending stock tokens at a time when regulatory pressure is mounting. Binance is caught in a complex web of legal concerns with jurisdictions of the Cayman Islands, the UK, Thailand and Singapore among others. 

Authorities of several countries have announced that they are either investigating Binance or closing its entities that are not authorized to operate within foreign borders. Payment processors and banks, primarily in Europe and the UK have cut off the cryptocurrency exchange. 

It is likely that Binance’s is under scrutiny since it has taken steps to stay ahead of legal action by hiring former members of the Financial Action Task Force to its advisory team. So far, this has proven effective as the exchange continues offering trading services to users in most countries globally, barring Iraq, Mainland China, North Korea among others. 

Changpeng Zhao (CZ), CEO of Binance stated that these investigations were a positive sign for the exchange in an open letter published recently.

During the four years, we have seen regulators take a more active interest in the industry as-a-whole as the industry goes mainstream. We welcome this development, however, there is still much to do to harmonize the treatment of cryptocurrency around the world. We aim to continue our efforts in working with regulators collaboratively to meet their concerns as the industry continues to grow.