Amid reports of regulators worldwide cracking down on various cryptocurrencies and exchanges, one of the top names in cryptocurrency is getting new scrutiny from the United Kingdom’s FCA agency.
Ian Allison reports at Coindesk that Binance, which has led the industry in some types of exchange functionality, is getting some regulatory attention for its brand-new stock tokens allowing traders to purchase small bits of equity from Tesla and Coinbase.
Why Binance would offer fractional Tesla investing probably needs no introduction – after spiraling stock prices, most small investors would struggle to afford one or more full Tesla shares at hundreds of dollars each.
As for Coinbase, finance offers a COIN token is a fraction of an actual Coinbase share after the latter exchange recently went public, and its own stock price soared.
Reportedly, all of this is going to be done using a Binance stablecoin (BUSD).
Regulators, Allison says, are trying to “understand” the product line and see if they can sign off on Binance’s newest project.
As for the major German regulator, the Federal Financial Supervisory Authority or “BaFin”, the agency came out with this interesting definition of a security:
“If tokens are transferable, can be traded at a crypto exchange and are equipped with economic entitlements like dividends or cash settlements, they represent securities and are subject to the obligation to publish a prospectus.”
Of course, even though the U.S. dollar is used for the BUSD stablecoin, the stock token option is not yet available in the United States, as pointed out by this Binance user’s manual for the tokens:
“You need an account on Binance. This also means that you must not be a resident of restricted jurisdictions, including China, United States of America and Turkey. After successful onboarding, you will be unlocked for stock token trading. Please note that we may need additional KYC information from you.”
What does all of this mean? For the U.S. investor, it means that fractional stock trading through crypto exchanges is taking on around the world, and might soon be coming to our shores.