For those who have been tracking the new stock token offerings from crypto exchange Binance, the whole thing seems a little bit like a fad.
New reports indicate Binance is going to drop support for stock tokens October 14.
In April, the company came out with this new idea for fractional stock buying of equities of firms like Tesla, Microstrategy and the newly public Coinbase, as well as big tech firms Microsoft and Apple.
Now, just a few months later, the company says it is dropping the stock token project in order to focus on other products.
Speaking July 7, Binance CEO Changpeng Zhao also cites unclear regulation as a barrier to moving forward with sustained stock token programs.
“(Zhao) addressed Binance’s woes in an open letter July 7, calling compliance a ‘journey’ and spoke of the need for ‘clearer regulatory frameworks’ in response to the wider adoption of crypto,” writes Jamie Crawley at Coindesk.
As for existing stock token holders, Europeans will see their assets merge into a CM Equity AG platform.
This spring, as Binance unveiled its stock tokens, it seemed like fractional investing was going to be one of the next big things, and the idea of offering tokenized fractional shares made a lot of sense.
“One of the most touted benefits of security tokens (also known as ‘digital securities’ and ‘smart securities’) is the ease with which fractional ownership in assets can be created, transferred, and further fractionalized,” writes Stefan Perlebach at Medium.
“If the fractional ownership is created for holders of the asset to benefit from the potential increase in value of the underlying asset, then the asset, regardless of its status before being fractionalized, will very likely be deemed to be a security.”
However, we see in Crawley’s reporting that regulators are often less than excited about new sales of derivative securities.
We’ll see if this phenomena pops up somewhere else but for now, one of the leading exchanges in the crypto space is closing out that sector of its business.