On Thursday, the Australian Securities & Investments Commission (ASIC) announced that Binance’s Australian derivatives license was canceled at the request of the crypto exchange, after the regulator had initiated a review of Binance in February.
From April 14, Binance’s derivatives clients in Australia will not be able to open or increase their existing trading positions, and by April 21, Binance will be required to close out any remaining trading positions. ASIC Chair Joe Longo said that their ongoing review includes a focus on consumer harms. In response to ASIC’s engagement, Binance decided to wind down the Binance Australia Derivatives business, according to a spokesperson. Binance’s exchange token was down by almost 0.5% on Thursday morning.
In recent weeks and months, regulatory scrutiny of Binance has been increasing. Binance’s market share has declined by 16% in recent weeks, although it remains the most dominant exchange in the world by volume, according to research firm Kaiko.
The Australian regulatory investigation was prompted by an inadvertent compliance issue. Binance operates in many countries through numerous subsidiaries, including Oztures Trading Pty Ltd in Australia. In February, Binance revealed that a small number of its Australian customers had been classified as wholesale investors, a trading classification that allows experienced investors to access more advanced financial products, similar to the qualified investor category in the United States.
Regulators worldwide are concerned about Binance’s treatment of high net worth investors. The Australian Securities & Investments Commission recently canceled Binance’s derivatives license at the exchange’s own request. Binance’s Australian derivatives clients will not be able to open or increase their existing trading positions starting April 14, and the exchange will have to close any remaining positions by April 21. The ASIC is also looking into consumer harm issues.
The US Commodity Futures Trading Commission has filed a complaint against Binance and its founder, Changpeng Zhao, for alleged anti-money laundering and know-your-customer compliance issues. Binance’s market share has dropped by 16% in recent weeks, according to research firm Kaiko, and regulatory scrutiny has been increasing. Binance has done business using numerous subsidiaries, including Oztures Trading Pty Ltd in Australia, and the Australian regulatory probe began when a compliance issue was discovered.
Binance has faced similar concerns in China, where customers used techniques encouraged by staff and volunteers to trade. The focus on Binance’s practices is part of a broader crackdown by US regulators on centralized exchanges. The Securities and Exchange Commission has warned Coinbase of potential securities charges.
Australia’s top securities regulator has been taking enforcement actions against several firms that it claims have violated Australian law. The ASIC noted that Binance group entities have been the subject of regulatory warnings and action from several overseas regulators.