According to a report from The Information, Binance is considering bringing back equity tokens on its platform after deprecating product tokens in 2021.
Stock tokens are digital representations of stocks of listed companies. Instead of owning an entire Apple or Microsoft stock, investors can buy a portion of the stock that is held and settled on the blockchain, reflecting the real-time price of the underlying asset.
Binance launched its equity token service in April 2021, starting with Tesla and rapidly expanding to Coinbase, Strategy, Microsoft, and Apple. The move has drawn increased scrutiny from regulators, with Britain’s Financial Conduct Authority and Germany’s BaFin questioning whether the tokens violate securities laws. By July of the same year, Binance discontinued its service.
However, interest in tokenized stocks has not disappeared. OKX, another major cryptocurrency exchange, is also considering this space, Haider Rafiq, global managing partner at the company, told The Information. And in the US, traditional financial players are also looking to get in on the action, with both the New York Stock Exchange and Nasdaq seeking regulatory approval to launch equity token products.
“Exploring the possibility of offering tokenized stocks is a natural next step in our mission to bring trad-fi and cryptocurrencies closer together,” a Binance spokesperson told The Information.
Still, legal barriers remain. Equity tokens were one of several outstanding issues in the Cryptocurrency Market Structure Bill that gained momentum in Congress. Industry executives said the bill, as written, would delay the launch of such products. Coinbase CEO Brian Armstrong publicly opposed the bill, calling for amendments that would allow the SEC to exempt certain tokenized products from standard securities rules.
