Late last week, the corporate regulator announced it had cancelled the Australian financial services licence of cryptocurrency exchange Binance after the company requested the cancellation a day earlier.
The Australian Securities and Investments Commission (ASIC) had earlier found that the company incorrectly classified retail customers as wholesale investors during a targeted review of Binance’s financial services business in Australia.
In a statement last week, the regulator’s chair, Joe Longo, said: “It is critically important that AFS licensees 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”.
“Our targeted review of these matters is ongoing, including focus on the extent of consumer harms,” said Mr Longo.
In a statement made to InvestorDaily, a Binance spokesperson said the company had chosen to pursue a “more focused” approach in Australia by winding down the Binance Australia Derivatives business.
“This does not affect Binance’s continued commitment to the development of the local blockchain and digital assets industry and Australians can continue to enjoy the use of our spot exchange product,” the spokesperson said.
“There are a small number of remaining users on Binance Australia Derivatives, approximately 100, and we have reached out to notify them of the winding down process.”
As a result of the AFS cancellation, ASIC explained that from 14 April, Binance clients will not be able to increase derivatives positions or open new positions with the company. Moreover, clients will be required to close any existing derivative positions before 21 April.
The corporate regulator added that the terms of the cancellation include a provision that the cancellation has no effect on the requirement for Binance to continue as a member of Australian Financial Complaints Authority until the end of 8 April 2024.
ASIC has repeatedly cautioned individuals interested in cryptocurrencies that they are inherently risky and complex and has warned crypto users that they should be prepared to lose any funds they invest.
“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,” said Mr Longo.
