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Australian Authority Cancels Binance’s Derivative License

Jammy Hunts 2023-04-07 00:00

Australian Securities and Investment Commission (ASIC) have canceled Binance’s derivatives license, a crypto exchange platform that has offered derivatives services in Australia since July 2022.

After deliberating on its mode of operations, ASIC has seen reasons to withdraw the exchange’s derivatives license. As such, the platform will no longer be able to perform its derivatives-based digital currency operations in the country. Notably, the cancellation of the license comes into effect “in response to a request to cancel received from Binance yesterday.”

ASIC Revokes Derivative License For Binance Australia

ASIC demands that all platform derivatives dealings must cease on or before April 14. Also, derivatives traders are expected to close all positions held before April 21. This order immediately followed the termination of the exchange’s derivatives license.

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Binance Australia has been a part of the country’s financial board known as the Australian Financial Complaints Authority (AFCA) long before now. Notably, the commission made it clear that it would not remove the exchange from its position as a member of the AFCA. This order will stand until April 4, 2024, according to the statement from ASIC.

Information from the Australian Securities and Investment Commission noted that it has been assessing the financial operations of the exchange in the country. It pointed out some of the areas of concentration, which were the processes of classifying wholesale and retail clients. 

ASIC Chair, Joe Longo, stated that the assessment aimed at protecting retail and wholesale clients with important rights in the country’s financial services laws. The major concern of the commission is that Binance Global and its CEO, Changpeng Zhao, have faced a few challenges with authorities over a few years. 

Also, the company is currently in a lawsuit with the United States Commodity Futures Trading Commission (CFTC). He also pointed to the investigations and warnings from some other regulators against the exchange, especially in 2021.

BNBUSD price chart

Binance Derivatives Account Closure As The Reason For The License Termination

The derivative section on the Binance platform primarily allows traders and investors to make trade different cryptocurrencies in the market. However, users are advised to beware of losing their funds.

Meanwhile, the commission’s decision may have come as a response to the notifications Binance sent its users toward the end of February 2023. Binance informed its users that it would start closing some derivatives positions and accounts.

The exchange noted that the reason for such action was based on investor classification compliance. It intended to exclude investors and users who didn’t meet the requirements to become wholesale investors. This action later attracted the attention of local regulators, who launched strict investigations on the derivatives operation of the exchange.

Considering the action from ASIC, Binance has decided to narrow its focus to other operations and services and let go of the Binance Australia Derivatives. But while that stands, the exchange will continue to provide dealings with spot trading on the platform for Australian citizens.