Australia’s financial regulator has cancelled the local financial services license of the world’s biggest cryptocurrency exchange, Binance, The Guardian reported.
Earlier this year, the Australian Securities and Investments Commission (Asic) found Binance had incorrectly classified hundreds of retail customers as wholesale investors.
The Asic chair, Joe Longo, said the distinction was important because retail customers have access to more consumer protections under Australian law, including the right to dispute resolution.
Binance’s Australia’s financial services (AFS) license only allows it to provide derivatives products to sophisticated investors, rather than retail customers.
The Australian Securities & Investments Commission (ASIC) posted: “23-09MR Binance Australia Derivatives – AFS license cancelled”. From the information:
AISC has today cancelled the Australian financial services license held by Oztures Trading Pty Ltd trading as Binance Australia Derivatives (Binance). The license cancellation was effected today in response to a request to cancel received from Binance yesterday.
Following the cancellation:
- With effect from 14 April 2023, clients will not be able to increase derivatives positions or open new positions with Binance;
- Binance will require clients to close any existing derivative positions before 21 April, 2023;
- On 21 April 2023, Binance will close any remaining open positions.
The terms if the cancellation include a provision that the cancellation has no effect on the requirement for Binance to continue as a member of the Australian Financial Complaints Authority until the end of 8 April 2024.
ASIC has been conducting a targeted review of Binance financial services businesses in Australia, including its classification of retail and wholesale clients. On 29 March 2023, ASIC issued a notice of hearing under s915C of the Corporations Act 2001 to consider whether ASIC should cancel or suspend the AFS license held by Oztures Trading Pty Ltd.
ASIC Chair Joe Longo said, “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.
“Our targeted review of these matters is ongoing, including focus on the extent of consumer harms”, said Mr. Longo.
CNBC reported that Binance’s Australian derivatives license was canceled the crypto exchange’s own request, the Australian Securities & Investments Commission said Thursday, after the regulator had begun a “targeted review of Binance” in February.
Beginning April 14, Binance’s derivatives clients in Australia will not be able to open or increase their existing trading positions. By April 21, Bianance will be required to close out any remaining trading positions, the regulator said.
According to CNBC, regulatory scrutiny of Binance has been mounting in recent weeks and months. Anti-money laundering and know-your-customer compliance issues are at the heart of the U.S. Commodity Futures Trading Commission’s extensive complain against the crypto exchange and its founder, Changpeng Zhao. The complaint detained how fees from derivatives trading provided highly lucrative revenue for Binance.
In my opinion, cryptocurrency is not something that will ever replace the federal currency of a country. I suppose it is possible that there are some cryptocurrency companies that are following the rules that were set in place by whatever country they operate in. However, it appears that Binance failed to follow the Australian regulator’s rules.