Category: Binance

Binance Stock Trading Draws Attention of UK financial Regulators

Binance Stock Trading Draws Attention of UK financial Regulators

The U.K. Financial Conduct Authority (FCA) and other European regulators are concerned about whether Binance’s new stock trading feature complies with security laws.

Binance Under Scrutiny for Listing Stock Tokens
Leading crypto exchange Binance launched stock trading on Apr. 12. While cryptocurrency enthusiasts celebrated the launch of the new trading feature, regulators were not as content.

A recent report from the Financial Times reveals that the U.K.’s Financial Conduct Authority is working with the trading platform to determine whether its stock tokens comply with security rules.

The financial watchdog is reportedly examining the “governing transparency and corporate disclosures” that may apply to these stock tokens and the methods by which they can be marketed.

It also emphasized that only Binance is responsible for verifying whether these financial products represent securities.

The FCA told the Financial Times that it is “working with [Binance] to understand the product, the regulations that may apply to it and how it is marketed.” It also stated that “firms and senior management teams are responsible for determining whether their products and services fall within the remit of the FCA.”

Digital Asset AG Says It Is Compliant
Binance maintains that stock token trading was made possible thanks to a partnership with CM-Equity AG and Digital Assets AG. Both groups are regulated entities that trade items that that do not require a prospectus—something that would be required if the tokens were considered securities under EU law.

Along the same lines, Brandon Williams, Digital Asset AG’s corporate development lead, told Crypto Briefing that it always begins its efforts by interacting with regulators.

“As expected, various regulators’ interests will be piqued, as with any monumental or ‘new’ activity.” Williams explained. “The incumbent institutions of traditional finance will always prefer the status quo, but we choose innovation and efficiency.”

Williams added that stock tokens do not give the same voting rights that equity shareholders get, which means that these financial products can be compared to synthetic stocks.

“We believed our method of tokenization would have more staying power and more easily find acceptance within the various crypto communities as well as TradFi. At the end of the day, synthetics are just another derivative product,” Williams concluded.

Binance Abruptly Delists South African Rand Trading Pairs After Currency Fails to Meet ‘High Level Standard’

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Binance Abruptly Delists South African Rand Trading Pairs After Currency Fails to Meet 'High Level Standard'

In an abrupt move, Binance South Africa announced on March 31 that all South African rand (ZAR) trading pairs will be delisted on April 2. The crypto exchange adds in a statement that “all trade orders will be automatically removed after 10.00 UTC on April 1” in each respective trading pair. Binance concludes by requesting users to withdraw all funds before the 10.00 UTC deadline.

ZAR No Longer Meets the Standard
In justifying the decision, Binance South Africa states that it “periodically reviews each digital asset we list to ensure it continues to meet the high level of standard we expect.” The email goes on to add that when “a token no longer meets this standard or when the industry changes,” a decision will be made to remove such a digital asset.

Meanwhile, in a strong hint that ZAR trading pairs had failed the in-depth review, Binance said:

Based on our most recent reviews, we have decided to delist and cease trading on all ZAR trading pairs at 10.00 UTC on April 1, 2021.

According to the statement, the exact trading pairs to be removed include USDT/ZAR, BTC/ZAR, ETH/ZAR, BUSD/ZAR and BNB/ZAR. Still, the email explains that South African users can still trade these “assets in other trading pairs that are available on Binance.”

Users Speculate
Meanwhile, not everyone is satisfied with Binance’s explanation for dropping ZAR trading pairs. For instance, one local report speculated that “a common delisting template (had been) used in the rush to push the announcement out.” However, the report also quotes an unnamed “Binance Africa Angel” who suggests that “the platform’s low liquidity on the pairs was cause for the decision.” The lack of ZAR deposit functionality is thought to be “exacerbating the problem.”

On Twitter, some users expressed surprise at the decision which they claim is contradictory. Basing their claims on a Chainalysis report, which places South Africa “among the top 10 countries in the world for crypto adoption”, the users argue that it, therefore, makes no sense for Binance to delist ZAR pairs.

 

Binance probed by CFTC over US resident ‘unregistered’ derivative trading

Binance Probed by CFTC Over US resident 'unregistered' derivative trading

Binance Holdings Ltd., the largest cryptocurrency exchange, is being investigated by the Commodity Futures Trading Commission over concerns that it allowed Americans to place wagers that violated U.S. rules, according to people familiar with the matter.

The CFTC is seeking to determine whether Binance, which isn’t registered with the agency, permitted U.S. residents to buy and sell derivatives that the regulator polices, said the people, who asked not to be identified because the probe is confidential. Binance, which has an office in Singapore but says it lacks a single corporate headquarters, hasn’t been accused of misconduct and the investigation may not lead to an enforcement action.

The scrutiny is the latest sign that market watchdogs may thwart the crypto industry’s ambitions of becoming more mainstream for U.S. investors. The CFTC considers virtual currencies like Bitcoin and Ether to be commodities and claims jurisdiction over their futures and other derivatives. That means crypto platforms face strict customer protection and oversight demands if Americans are trading on them — regardless of where exchanges are based.

Binanance co-founder Changpeng Zhao said Friday that the company closely follows American rules and has strong controls to prevent its customers from laundering funds. Speaking during an event on the social media platform Clubhouse, he declined to comment on whether the CFTC is investigating Binance.

“We’ll continue to improve our compliance,” Zhao said. “We’ll also work very actively with regulators around the world to improve the compliance standards of the industry.”
Binance said in an earlier statement Thursday that it blocks U.S. residents from its website and uses advanced technology to analyze deposits and withdrawals for signs of illicit transactions. Binance takes its compliance obligations “very seriously,” the company said. The CFTC declined to comment.

Bitcoin fell after news of the Binance investigation was reported. It was down 1.6% to $56.685.02 as of 4:17 pm New York time.

Source – Bloomberg  News