Cryptocurrency exchange Binance has added the ability to trade Tesla and Coinbase tokenized shares, which experts say could lead to regulatory bans in Hong Kong.
The ability to trade such tokens is closed to residents of some countries, for example, Chinese and Americans. But for the citizens of Hong Kong, the function is available and this may cause pressure on Binance from the local regulator. As noted by Gaven Cheong, partner at the law firm Simmons & Simmons, the announcement of the possibility of trading tokenized shares can be mistaken for advertising investments in securities, which is prohibited without obtaining a license.
“The Hong Kong Securities and Futures Commission (SFC) rules require that the public release of any advertisement or other document inviting the purchase or sale of any security is a violation unless specifically authorized by the SFC,” Cheung said.
Accordingly, encouraging Hong Kong residents to buy tokenized securities is a licensed activity. In addition, trading in tokens-shares, even if the appropriate license is obtained, should be available exclusively to professional investors. As far as is known, so far the local regulator has not taken any action on this matter, but it may well do it in the near future.
Recall that the ability to trade Tesla tokenized shares on the Binance platform appeared a week ago. Users can buy even a hundredth of a share, while in the stock market, the minimum investment is much higher. At the same time, trading in tokenized shares is conducted in tandem with BUSD, the exchange’s own stablecoin pegged to the US dollar.