Australian Regulatory Body Revokes Binance's Derivatives Operating Permit
Crypto Exchange Binance Loses Derivatives License in Australia
In a shocking turn of events, the Australian Securities and Investment Commission (ASIC) has pulled the plug on Binance's derivatives license, putting a halt to the crypto exchange's derivatives-based digital currency operations in the country. This move comes after ASIC raised concerns over Binance's mode of operations.
ASIC Revokes Binance's Derivatives License
Binance was given a deadline to cease all derivatives dealings on or before April 14, and all positions held before April 21 must be closed. This order was issued soon after the termination of Binance's derivatives license.
Despite losing its derivatives license, Binance remains a member of the Australian Financial Complaints Authority (AFCA) until April 4, 2024.
ASIC's Assessment of Binance's Operations
ASIC has been keeping a close eye on Binance's financial operations in Australia, focusing on the process of classifying wholesale and retail clients. The commission's primary concern is to safeguard the rights of retail and wholesale clients in Australia's financial services laws.
Joe Longo, the chair of ASIC, noted that Binance Global and its CEO, Changpeng Zhao, have faced challenges with authorities over the years. The exchange is currently embroiled in a lawsuit with the United States Commodity Futures Trading Commission (CFTC). ASIC also highlighted investigations and warnings from other regulators against Binance, particularly in 2021.
Closure of Derivatives Accounts and Positions
The closure of derivatives positions and accounts may have been the catalyst for ASIC's action. Binance had informed its users in late February 2023 that it would start closing some derivatives positions and accounts due to investor classification compliance.
Binance's Response to ASIC's Decision
In response to ASIC's decision, Binance has decided to focus on other operations and services, effectively letting go of Binance Australia Derivatives. However, the exchange will continue to provide spot trading services to Australian citizens.
Enrichment DataThe main reason behind ASIC revoking Binance Australia Derivatives' license was due to consumer protection failures, primarily client misclassification concerns. ASIC's ongoing scrutiny of Binance indicates that the exchange faces potential enforcement risks, such as fines or operational shutdowns if compliance gaps persist. Additionally, Binance must now navigate Australia’s Digital Asset Platform (DAP) licensing regime, which mandates stricter capital, custody, and disclosure rules. Repeated regulatory actions could also undermine trust among Australian users, prompting them to migrate to competitors with stronger compliance frameworks.
Sources: ASIC (1), ASIC (2), CoinDesk (4)
Binance was given a deadline by ASIC to stop all derivatives dealings, with all positions closed by April 21.ASIC has been examining Binance's financial operations in Australia, particularly the classification of wholesale and retail clients to safeguard the rights of clients.The closure of derivatives positions and accounts by Binance might have been the reason for ASIC's action.Binance, in response to ASIC's decision, will concentrate on other operations, letting go of Binance Australia Derivatives, but will continue providing spot trading services to Australian citizens.
