The Australian Securities & Investments Commission announced Thursday that Binance’s derivatives license was revoked at the cryptocurrency exchange’s request. The regulator had started a “targeted review of Binance” in February.
Starting on April 14, Australian users of Binance’s derivatives products will not be able to create new positions or increase their current ones. According to the regulation, Binance must close down all open trading positions by April 21.
ASIC Chair Joe Longo stated that “our targeted review of these issues is ongoing, with a focus on the extent of consumer harms.”
A representative for Binance said, “Following recent discussion with ASIC, Binance has elected to adopt a more concentrated approach in Australia by shutting down the Binance Australia Derivatives business,” noting that there were “about 100′′ remaining derivatives customers.
On Thursday morning, the exchange token for Binance was down little less than 0.5%.
Over the past few weeks and months, Binance has come under increasing regulatory scrutiny. The detailed lawsuit filed against the cryptocurrency exchange and its creator, Changpeng Zhao, by the U.S. Commodity Futures Trading Commission centers on anti-money laundering and know-your-customer compliance issues. The complaint described how Binance received incredibly lucrative fees from derivatives trading.
According to research firm Kaiko, Binance’s market share has decreased 16% recently, despite the fact that it is still the world’s most popular exchange by volume.
The Australian regulatory investigation was the result of an ostensibly accidental compliance problem. Utilizing a wide network of subsidiaries, including Oztures Trading Pty Ltd in Australia, Binance conducts business all over the world.
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Binance revealed in February that a “small number” of its Australian customers had been given the trading designation of “wholesale investors,” which gave them access to more advanced financial products. It’s a title that can be roughly compared to the “qualified investor” classification in the United States.
Regulators around the world have expressed alarm about Binance’s high net-worth investors. The CFTC accused Binance of giving its wealthiest clients preferential treatment and assisting them in trading through foreign shell firms or virtual private networks to avoid U.S. restrictions.
CNBC earlier reported on similar practices advocated by staff and volunteers that were employed by Binance’s clients in mainland China.
The increased focus on Binance’s business operations coincides with a wider crackdown on centralized exchanges by US regulators. Recently, the Securities and Exchange Commission informed Coinbase that it would soon be subject to securities-related charges.
The main securities regulator in Australia has had a tense relationship with the cryptocurrency sector lately, seeking enforcement measures against several companies it claims have broken Australian law.
For the first time in close to two years, the number of open positions fell below 10 million in February.
According to the ASIC announcement, “Binance group entities have been the target of regulatory warnings and action from a number of overseas regulators.”