Binance Loses Financial Services License in Australia Amid Regulatory Scrutiny

The Australian Securities and Investments Commission (ASIC) has canceled Binance's financial services license in the country after the exchange requested the action. The license was held by Oztures Trading Pty Ltd, which traded as Binance Australia Derivatives.

According to ASIC, it has been conducting a targeted review of Binance's financial services business in Australia, including its classification of retail and wholesale clients. The regulator issued a notice of hearing on March 29 to consider whether the AFS license should be canceled or suspended.

ASIC Chair Joe Longo stated that it is critically important for AFS licensees to classify retail and wholesale clients in accordance with the law. 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.

The cancellation of Binance's financial services license in Australia means that from April 14, users will no longer be able to increase derivatives positions or open new positions on Binance. Clients will be required to close any existing derivatives positions before April 21, and the exchange will close any remaining open positions on that date.

Binance has faced regulatory scrutiny around the world in recent months. In the UK, the Financial Conduct Authority (FCA) issued a warning to Binance in June 2021, stating that the exchange was not permitted to undertake any regulated activities in the country. The warning came after the FCA conducted a review of Binance's operations in the UK.

In the US, the Commodity Futures Trading Commission (CFTC) is investigating whether Binance allowed Americans to trade on its platform, which would be a violation of US law. The exchange has denied any wrongdoing.

Binance has also faced regulatory challenges in Japan, Thailand, and the Cayman Islands, among other jurisdictions. In response, the exchange has sought to expand its compliance team and establish closer ties with regulators.

In Australia, the cancellation of Binance's financial services license is a reminder of the importance of complying with financial services laws and regulations. It also underscores the need for regulators to stay vigilant in monitoring the activities of cryptocurrency exchanges and other players in the crypto industry.

As ASIC's Joe Longo noted, the regulator's targeted review of Binance's financial services business in Australia is ongoing, with a focus on the extent of consumer harms. This suggests that more regulatory action could be forthcoming, as regulators seek to protect investors and maintain the integrity of the financial system.