Binance’s Australian derivatives license was canceled at the request of the crypto exchange itself. The Australian Securities & Investments Commission (ASIC) announced this after regulators began a targeted review of Binance in February.
Starting April 14th, Binance derivatives clients in Australia will not be able to open or upgrade their existing trading positions. On April 21, Binance will be asked to close any remaining trading positions.
“Our target review of this issue is ongoing, including a focus on the extent of consumer harm,” said ASIC Chairman Joe Longo, quoted from CNBC Saturday (7/4/2023).
“Following its recent engagement with ASIC, Binance has opted to pursue a more Australia-focused approach by discontinuing the Binance Australia Derivatives business,” said a Binance spokesperson, adding that there were approximately 100 derivatives customers remaining.
Regulatory scrutiny of Binance has increased in recent months. Anti-money laundering and know-your-customer compliance issues are at the heart of the US Commodity Futures Trading Commission’s extensive complaints against the crypto exchange and its founder, Changpeng Zhao.
The complaints include how fees from trading derivatives provide highly profitable revenue for Binance. Binance’s market share has slumped 16 percent in recent weeks according to research firm Kaiko. Although Binance remains the most dominant exchange in the world by volume.
An apparently accidental compliance issue led to an Australian regulatory investigation. Binance does business around the world using a large number of subsidiaries, including Oztures Trading Pty Ltd in Australia.
In February, Binance disclosed that a small number of its Australian customers had been classified as retail investors, a trade classification for experienced investors that allows them access to more sophisticated financial products. This is roughly the same designation as the category of eligible investors in the US.
Binance’s high net worth investors have become a point of concern for regulators around the world. In the US, Binance has been accused of offering favorable treatment to its richest clients, helping them bypass US regulations by trading through offshore shell companies or virtual private networks.
The increased attention to Binance’s practices comes as US regulators crack down on centralized exchanges more broadly. The Securities and Exchange Commission recently warned Coinbase that the company could potentially face securities fees soon.
Australia’s main securities regulator has had a challenging relationship with the crypto industry in recent months, following enforcement action against several companies the regulator said had violated Australian law.
