The Australian Securities and Investment Commission (ASIC) has revoked Binance’s derivatives license, which allowed the crypto exchange to offer derivatives services in Australia since July 2022. ASIC cancelled the license in response to a request submitted by Binance, effective immediately.
The cancellation affects Binance’s operations in Australia, and all derivatives dealings on the platform must cease on or before April 14, with derivatives traders required to close all positions held before April 21.
ASIC has been closely monitoring Binance’s financial operations within the country, particularly focusing on the processes of classifying wholesale and retail clients. ASIC Chair, Joe Longo, emphasized that the assessment aimed to protect retail and wholesale clients under the country’s financial services laws.
Changpeng Zhao, Binance’s CEO, and the company have faced challenges with authorities in recent years. Binance is currently involved in a lawsuit with the United States Commodity Futures Trading Commission (CFTC) and has received warnings from other regulators.
The Australian Securities and Investments Commission (ASIC) has canceled Binance Australia’s derivatives license on upon the exchange’s request.#Binance users in Australia are required to close any existing derivative positions before 21 April 2023.🔎
— Whale Coin Talk (@WhaleCoinTalk) April 6, 2023
Reasons for Revocation
The commission’s decision may be linked to the notifications Binance sent its users in late February 2023, announcing the closure of some derivatives positions and accounts due to investor classification compliance. The exchange sought to exclude users who didn’t meet the requirements to be classified as wholesale investors. This move prompted local regulators to launch investigations into the exchange’s derivatives operations.
In response to ASIC’s decision, Binance has opted to shift its focus to other services and discontinue Binance Australia Derivatives. However, the exchange will continue to offer spot trading for Australian citizens. This wasn’t the case for its UK counterpart though, which halted deposits and withdrawals due to bank policies stifling its operations. Binance recently denied rumors of a red notice, with the exchange still facing a case from the CFTC.
There are some misinformation (and confusion) about #Binance Australia.@Binance_AUS requested to cancel the derivatives license yesterday. The platform had exactly 104 users as of yesterday.@Binance_AUS will CONTINUE to operate the spot exchange in AU. 🙏 pic.twitter.com/nEExtG4U90
— CZ 🔶 Binance (@cz_binance) April 6, 2023
Impact on Australian Operations
The license cancellation has impacted Binance’s operations in Australia, with the exchange no longer able to offer derivatives services to its customers. Despite the license cancellation, Binance Australia will remain a member of the Australian Financial Complaints Authority (AFCA) until April 4, 2024.