By George Ward
The Australian arm of the world’s largest crypto exchange, Binance, reportedly lost its derivatives license after the country’s securities regulator canceled its approval. This comes after a review of the exchange activities, which effectively force the Australian Securities and Investment Commission (ASIC) to terminate the firm’s financial services license.
A Targeted Review Of Binance’s Services
According to ASIC, it has canceled Binance Australia Derivative Product license following a targeted evaluation of the exchange activities in the country. The financial services license held by Oztures Trading Pty Ltd, which trades as Binance Australia Derivatives, is no longer approved in the country, according to the latest statement from the commission.
With the termination of the license, Binance Australia Derivatives customers would be unable to increase their derivative positions or start new ones effective April 14. In addition, the firm also requires users to close all their current derivative positions on or before April 21, with Binance expected to close the remaining positions on the last day of the deadline.
ASIC went on to say that it has been carrying out a targeted assessment of Binance business in Australia along with its category of retail and wholesale customers. Joe Longo, ASIC’s chair, stated that the review of Binance is related to compliance concerns with the classification of the company’s clients.
According to the official state statement from ASIC, retail crypto derivative clients are given necessary preferences under the financial services rule in Australia.
The CFTC Link
Meanwhile, the ASIC report mentioned that Binance and its CEO, Changpeng Zhao (CZ), are in a lawsuit filed by the US Commodity Futures Trading Commission (CFTC). According to the Australian regulator, most Binance subsidiaries have been subjected to regulatory scrutiny in different jurisdictions since 2021, and more jurisdictions continue to scrutinize the exchange or its subsidiaries.
However, a Binance spokesperson revealed that the exchange has opted to pursue a focused approach in the country because of its recent interaction with ASIC by agreeing to close down its derivatives services. The representative added that spot trading on Binance is still open to Australians as they can continue to enjoy the exchange’s product.
The new development comes after Binance Australia Derivatives reportedly notified users in late February, revealing its decision to close most derivative positions and accounts. In the notifications sent to users, Binance cited investor classification compliance as one of the reasons for its decision.
The classification compliance reportedly wants Binance to restrict users who do not meet the requirements to become wholesale investors. Recently, Binance has had a hard time with regulators worldwide over its operations within their jurisdictions.
In the March lawsuit, the CFTC accused the exchange of breaking several US financial laws and rules to prevent money laundering. However, Binance defended its operations, stating that it has made significant efforts to prevent US citizens from accessing its platform.
According to the CFTC, Binance has been active in the United States since 2019 and has failed to register with the government properly or comply with the relevant financial laws. The regulator added that Binance intentionally used an opaque corporate structure to evade oversight via its numerous subsidiaries.
Since the start of the year, US regulatory agencies have doubled down on oversight of the crypto industry following high-profile bankruptcies last year.