Big Blow For Binance: Financial Regulator Cancels Binance Derivatives Business License

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The world’s largest cryptocurrency exchange, Binance, has been dealt a major blow after financial regulators cancelled its derivatives business license.

Binance Australia’s derivatives license has been cancelled by the ASIC, as stated in a press release on Thursday. Binance had requested on April 5, which led to this outcome.

Binance Australia, a part of the biggest crypto exchange in the world according to trading volume, will shut down all current derivative positions of its customers by April 21. As of yesterday, only 104 users were registered on the platform, as Binance CEO Changpeng Zhao mentioned in a tweet. However, Binance’s cryptocurrency spot exchange in Australia will continue its operations.

The cryptocurrency company has announced that it is “scaling back” its derivatives offering to “focus more closely” on its core goals.

“AFS licensees must comply with the law when classifying retail and wholesale clients, as it is a crucial aspect,” said ASIC Chairman Joseph Longo. “Traders who are retail clients and deal with crypto derivatives have certain rights and consumer protections under financial laws in Australia. These include access to external dispute resolution through the Australian Financial Complaints Authority.”

Longo reiterated that ASIC favours establishing a regulatory framework for cryptocurrencies in Australia but emphasizes that the government will ultimately make the final decision.

Australia’s decision to take action against Binance follows a lawsuit filed by the U.S. Commodity Futures Trading Commission against Binance and its founder, Changpeng Zhao, for providing unregistered derivatives products in the United States.

Binance Australia is the latest example of a major cryptocurrency company dealing with regulatory issues. Earlier this year, Coinbase, another giant in the space, had its derivatives license suspended by the SEC.

The news is yet another reminder of how difficult it can be to operate in an increasingly regulated financial world. While Binance may have faced regulatory setbacks, the exchange’s massive user base and influence in the cryptocurrency industry is still a testament to its success. The latest news will undoubtedly be a significant setback for Binance, and how the company plans to handle these challenges remains to be seen.

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