On Thursday, The Australian markets regulator, ASIC, informed that it canceled a financial markets license held by Binance Australia Derivatives, operated by Oztures Trading Pty Ltd. Although at first glance, it may seem that the regulatory hurdles of the renowned crypto exchange seem to have no end. This time, the decision to withdraw the license was made by Binance itself.
However, it came after the regulator held a hearing last week, considering whether it should suspend or cancel the license held by Oztures Trading.
ASIC Cancels Binance License in Australia
According to ASIC's statement, starting from 14 April 2023, it will not be possible for clients to increase their derivatives positions or open new positions with Binance. Additionally, the crypto exchange will require all clients to close any existing derivative positions they may have before 21 April 2023. If they fail to do so, the exchange that day will close all remaining trades automatically.
The supervisor has been executing a focused evaluation of Binance's financial services operations within Australia, with particular attention to the categorization of retail and wholesale consumers. On 29 March 2023, ASIC served a hearing notice to assess whether the AFS license held by Oztures Trading Pty Ltd should be revoked or put on hold.
We have cancelled the Australian financial services licence held by Oztures Trading Pty Ltd, trading as Binance Australia Derivatives https://t.co/lwqfRanBc2 #crypto #binance pic.twitter.com/DcmX4xdhpD
— ASIC Media (@asicmedia) April 6, 2023
"It is critically important that AFS licensees classify retail and wholesale clients in accordance with the law. Retail clients trading in crypto derivatives are afforded important rights and consumer protections under financial services laws in Australia, including access to external dispute resolution through the Australian Financial Complaints Authority," Joe Longo, the Chairman at ASIC, commented.
The stipulations surrounding the termination encompass a clause stating that the annulment will not impact Binance's obligation to remain a part of the Australian Financial Complaints Authority until 8 April 2024.
Taking the opportunity, ASIC reminds us that cryptocurrencies are a risky and complicated financial instrument, and cryptocurrency derivatives carry additional risks due to leverage.
Binance's Regulatory Hurdles
ASIC, in its announcement regarding the cancellation of Binance's license, reminds us that on 27 March 2023 the US Commodities Futures Trading Commission (CFTC) declared that it has initiated a civil enforcement lawsuit in the US District Court for the Northern District of Illinois. It accused Changpeng Zhao, the CEO of the Binance Group, and three organizations responsible for Binance's operations of multiple breaches of the Commodity Exchange Act (CEA) and CFTC regulations.
A mere few hours following CFTC’s legal action, Binance's CZ openly dismissed the accusations as "unexpected and disappointing," characterized by "an incomplete recitation of facts." In a concise retort via an official blog entry, Zhao denied all the primary claims, ensuring that comprehensive responses will be provided in due course.
My Response to the CFTC Complaint | Binance Blog https://t.co/TadyotM7HN
— CZ ???? Binance (@cz_binance) March 27, 2023
Earlier, many other overseas regulators published their own warnings regarding Binance operations. There are at least seven regulators on the list, including the UK's FCA, Japan's FSA, Italy's CONSOB, Singapore's MAS, Netherlands Central Bank, Ontario Securities Commission and Thailand's SEC.
Despite the regulatory problems that have dogged Binance since at least 2021, the exchange achieved its largest market share among other cryptocurrency exchanges in March. Binance's popularity grew despite declining volumes at other major exchange offerings and the US legal issues with the BUSD stablecoin.
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This article was written by Damian Chmiel at www.financemagnates.com.
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