Binance announced on Friday that it will no longer trade digital tokens tied to shares, as Hong Kong's financial watchdog became the latest authority to crack down on the cryptocurrency exchange platform's "stock tokens" sales.
Stock tokens are digital versions of equities pegged to the value of the relevant share. Unlike regular stocks, they are often bought and traded in fractional quantities.
"Effective now, stock tokens are no longer accessible for purchase on Binance.com," the exchange announced on its website, adding that all support for the items will be discontinued in October.
Concerns about inadequate consumer protection and the use of digital coins for money laundering have increased global investigation of the cryptocurrency business, with regulators recently focusing on Binance, one of the world's largest platforms.
Following Binance's action, Hong Kong's Securities and Futures Commission (SFC) stated that the exchange was not permitted to conduct regulated operations in the city. It was also said that selling stock tokens to the Hong Kong public without authorization might be a crime.
"Anyone who violates a relevant law may be prosecuted and, if convicted, subject to criminal consequences," according to the SFC.
A spokeswoman for Binance declined to comment on the SFC's decision, which came a day after Italian regulators issued a similar announcement.
Binance presently does not have exchange operations in Hong Kong and takes its legal duties seriously, according to the spokesman.
It was unclear if worldwide regulators had coordinated their actions, which have put unprecedented global pressure on a large cryptocurrency business.
Binance, the world's largest exchange by spot trading volumes last month, provides customers with a wide range of services, including cryptocurrency spot and derivatives trading, digital wallets, and stock tokens.
It was distributing tokens for firms such as Apple, Microsoft, and Tesla.
Later that day, Lithuania's central bank issued a warning to Binance regarding its "unlicensed investing services." According to the report, consumers risk losing all of their money in crypto-asset-related services.
WORLDWIDE CRACKDOWN
Regulators in the United Kingdom, Germany, Japan, and other nations have increased their warnings about Binance, and the United States is allegedly examining the exchange.
On Thursday, Italy's market regulator stated that Binance was not authorized to conduct investment services and operations in the nation. Its website has provided information in Italian about goods such as stock tokens.
The Financial Conduct Authority (FCA) in the United Kingdom, which ruled last month that Binance could not conduct regulated operations, declined to comment on whether it had contacted other authorities.
According to a spokesman, the FCA frequently collaborates and exchanges information with authorities across the world on a variety of topics.
The German regulator, BaFin, warned Binance in April that it faced a punishment for selling stock tokens without first releasing an investor prospectus.
Binance customers who own stock tokens can sell or retain them for the next 90 days, according to the exchange, but they will no longer be allowed to sell or liquidate holdings after October 14.
"We think that moving our commercial focus to other product offerings will better serve our customers, and we are dedicated to make this transition as easy for those affected as possible," a Binance spokesman stated.
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