Binance loses Australian financial services licence after ASIC warning

The world’s biggest cryptocurrency exchange, Binance, has been stripped by the corporate watchdog of its licence to operate a financial services business in Australia, just days after it was accused by US regulators of operating an illegal exchange.

The Australian Securities and Investments Commission (ASIC) on Thursday afternoon announced it had cancelled the licence of Binance’s locale entity, Oztures Trading, after a request from the company the day before.

Binance is the biggest cryptocurrency exchange in the world. Credit: Bloomberg

ASIC said in a statement that it had issued a notice to the company on March 29, warning that it was considering suspending or cancelling the group’s licence.

ASIC’s notice to the company came just two days after Binance was accused by powerful US regulator, the Commodities Futures Trading Commission, of multiple wilful breaches of US law.

From April 14, Binance will no longer sell highly complex derivative products to Australian consumers. All consumers will be required to close their positions by April 21.

ASIC said in a statement that it had been conducting a targeted review of Binance’s financial services business in Australia, including its classification of retail and wholesale clients. That review was sparked by Binance’s announcement in February that it had incorrectly classified retail clients as wholesale clients, who can be sold a range of high-risk products that are banned for retail clients.

“It is critically important that AFS licensees classify retail and wholesale clients in accordance with the law,” ASIC chairman Joe Longo said.

“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,” Mr Longo said.

A spokesperson for Binance said Australian consumers could still use its spot exchange product.

“Following recent engagement with ASIC, Binance has chosen to pursue a more focused approach in Australia by winding down the Binance Australia Derivatives business.

“This does not affect Binance’s continued commitment to the development of the local blockchain and digital assets industry and Australians can continue to enjoy the use of our spot exchange product. ”

It said only 100 customers were still using its derivative products. The group obtained a licence to operate in Australia in early 2022.

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