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Binance Cancels its License in Australia at the Request of Regulators

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Binance Cancels its License in Australia at the Request of Regulators

The Australian Securities & Investments Commission announced on Thursday that Binance’s derivatives license in Australia has been canceled at the request of the cryptocurrency exchange. This comes after the regulator initiated a “targeted review of Binance” in February.

The regulator announced that starting from April 14, Binance will not allow its derivatives clients in Australia to open new trading positions or increase their existing ones. Binance will also be required to close out all remaining trading positions by April 21.

ASIC Chair Joe Longo said that their review of Binance’s matters is still ongoing, including a focus on the extent of consumer harm. In response, a Binance spokesperson said that after engaging with ASIC, the crypto exchange has decided to wind down its Binance Australia Derivatives business in Australia, as it pursues a more focused approach. The spokesperson added that there are only around 100 derivatives customers left.

On Thursday morning, Binance’s exchange token experienced a decrease of just under 0.5%. Over the past weeks and months, Binance has faced increasing regulatory scrutiny. The US Commodity Futures Trading Commission has filed a detailed complaint against the crypto exchange and its founder, Changpeng Zhao, citing compliance issues related to anti-money laundering and know-your-customer regulations. The complaint also revealed that Binance’s revenue was significantly boosted by fees from derivatives trading.

According to research firm Kaiko, Binance has experienced a 16% decline in market share in recent weeks, although it remains the most dominant exchange in the world by trading volume. The Australian regulatory investigation into Binance was reportedly triggered by an unintentional compliance issue. Binance conducts business globally through numerous subsidiaries, including Oztures Trading Pty Ltd in Australia.

Binance revealed in February that a limited number of its Australian clients had been identified as “wholesale investors,” a trading classification for seasoned investors that enables them to access more advanced financial products. This classification is similar to the “qualified investor” category in the United States.

Regulators around the world have expressed concerns over Binance’s treatment of high net worth investors. The US CFTC accused Binance of offering special privileges to its wealthiest clients, allowing them to bypass US regulations by trading through virtual private networks or shell companies based overseas.

As U.S. regulators increase their scrutiny on centralized exchanges, Binance has also come under heightened attention. The Securities and Exchange Commission (SEC) has issued a warning to Coinbase, indicating that the exchange may face potential securities charges.

The crypto industry has faced a tough time with Australia’s primary securities regulator in recent months, with several firms allegedly breaching Australian law and facing enforcement actions. The ASIC release highlighted that Binance group entities have received regulatory warnings and action from various regulators overseas.

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