Digital Asset Giant Loses ASIC License

On Thursday, the Australian Securities and Investment Commission (ASIC) announced the cancellation of a financial markets licence held by Binance Australia Derivatives, operated by Oztures Trading Pty Ltd. Although, at first glance, the renowned crypto exchange's regulatory hurdles may be interminable. This time, Binance chose to withdraw the licence.

However, it occurred after the regulator convened a hearing last week to decide whether to suspend or cancel Oztures Trading's licence.

According to ASIC, clients cannot further add current derivatives positions or create new contracts with Binance beginning 14 April 2023. Furthermore, the cryptocurrency exchange will compel all clients to close any current derivative positions by 21 April 2023. If they do not, the exchange will automatically close all remaining deals on that day.

The supervisor has been conducting a detailed review of Binance's financial services operations in Australia, focusing on the classification of retail and wholesale users. ASIC issued a hearing notice on 29 March 2023 to determine if Oztures Trading Pty Ltd's AFS licence should be cancelled or suspended.

ASIC Chairman Joe Longo explained that AFS licenses must lawfully classify retail and wholesale clients. This is vital because, under Australian financial services legislation, retail consumers trading in crypto derivatives have important rights and consumer safeguards, including access to external dispute resolution through the Australian Financial Complaints Authority.

The terms of the termination include a provision indicating that the termination will not affect Binance's requirement to be a member of the Australian Financial Complaints Authority until 8 April 2024.

Taking advantage of the situation, ASIC reminds the public that cryptocurrencies are a risky and difficult financial instrument, and bitcoin derivatives pose additional risks owing to leverage.

In its notice about the cancellation of Binance's licence, ASIC announces that the US Commodity Futures Trading Commission (CFTC) announced on 27 March 2023 that it started a civil enforcement lawsuit in the US District Court for the Northern District of Illinois. It charged Changpeng Zhao, CEO of the Binance Group, and three organisations in charge of Binance's operations with several violations of the Commodity Exchange Act (CEA) and CFTC regulations.

In conjunction with this news, Zhao disputed all of the key claims in a brief reaction via an official blog entry, stressing that comprehensive responses would be issued in due course.

Previously, numerous other international regulators issued their own concerns about Binance operations. There are at least seven regulators on the list, including the FCA of the United Kingdom, the FSA of Japan, the CONSOB of Italy, the MAS of Singapore, the Netherlands Central Bank, the Ontario Securities Commission, and the SEC of Thailand.

Despite regulatory issues that have plagued Binance since at least 2021, the company gained the highest market share among cryptocurrency exchanges in March. Despite decreased volumes at other major exchange offers and legal difficulties with the BUSD stablecoin in the United States, Binance's popularity has grown.