ASIC cancels Binance Australia’s financial services licence

Australia’s financial regulator has cancelled the licence of the world’s biggest cryptocurrency exchange, Binance.

Screenshot from Binance, Crypto Marketplace app

Australia’s financial regulator has cancelled the licence of the world’s biggest cryptocurrency exchange, Binance.

The move by the Australian Securities and Investments Commission (ASIC) means clients will no longer be able to increase their derivatives positions or open new ones with Binance, from April 14.

Existing derivative positions must be closed by April 21.

ASIC‘s terms of the cancellation state that Binance must continue as a member of the Australian Financial Complaints Authority until April 8, 2024.

Earlier this year, ASIC found that Binance had incorrectly classified hundreds of retail customers as wholesale investors, giving them less legal protections.

Blockchain and cryptocurrency Binance founder and CEO Changpeng Zhao.

“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,” ASIC Chair Joe Longo said in a statement.

“Our targeted review of these matters is ongoing, including focus on the extent of consumer harms.”

ASIC has repeatedly warned potential crypto users that crypto is risky and complex. Crypto derivatives pose additional risks to consumers through the operation of leverage.

Many crypto products and services are not regulated by ASIC.

“As we have said before, ASIC supports a regulatory framework for crypto with a focus on consumer protection and market integrity. The final decision as to the regulatory settings is one for Government,” Mr Longo said.

Clients will no longer be able to increase their derivatives positions or open new ones with Binance, effective April 14.

In recent months, US regulators have cracked down on players in the cryptocurrency community. Last week, Binance was sued by US regulators, plunging the sector into the red.

It comes after three Canadian cryptocurrency companies announced on Monday they are teaming up to create the largest and only fully regulated platform in the country, at a time when authorities are trying to compensate for a lack of legislation to regulate the industry.

The announcement came months after the fall of industry giant FTX, whose founder Sam Bankman-Fried faces charges including bribery and fraud in a scandal that rocked the cryptocurrency world.

When combined, the WonderFi, Coinsquare and CoinSmart companies will have over Can$600 million (410 million euros) in assets on deposit, according to a joint press release.

“This combination will create a safe, secure, scalable and regulated trading platform that can compete with the unregulated global exchanges still operating in Canada,” said Coinsquare CEO Martin Piszel.

The new platform will be able to rely on the reputation of Coinsquare, which in October became the first Canadian platform to be registered with the national regulatory body.

“For years operating a registered cryptocurrency platform was a disadvantage as competitors that provided services without the burden of compliance costs were far more profitable,” said WonderFi strategic investor, Kevin O’Leary, known for his prominent role in the US investment reality show “Shark Tank.”

“Those days are over,” he added.

“Investors that see the tremendous potential of cryptocurrencies to make financial services more transparent, less costly, and more productive are seeking investment opportunities that operate in harmony with their regulators.”

— with AFP