The Australian Securities and Investments Commission (ASIC) has canceled the Australian financial services license held by Oztures Trading Pty Ltd trading as Binance Australia Derivatives. The cancellation comes after a targeted review by ASIC of Binance’s financial services business in Australia, including its classification of retail and wholesale clients. ASIC issued a notice of hearing under s915C of the Corporations Act 2001 to consider whether ASIC should cancel or suspend the AFS license held by Oztures Trading Pty Ltd.
The cancellation has an immediate effect, meaning that from 14 April 2023, clients will not be able to increase derivatives positions or open new positions with Binance. Additionally, Binance will require clients to close any existing derivative positions before 21 April 2023. On 21 April 2023, Binance will close any remaining open positions.
ASIC Chair Joe Longo emphasized the importance of AFS licensees classifying 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. ASIC’s targeted review of these matters is ongoing, including a focus on the extent of consumer harm.
Another Setback for the Cryptocurrency Exchange
ASIC has repeatedly warned potential crypto users that crypto is risky and complex. Crypto derivatives pose additional risks to consumers through the operation of leverage. Many crypto products and services are not regulated by ASIC. More than with other types of investments, crypto users should be prepared to lose any funds they invest in crypto. ASIC supports a regulatory framework for crypto with a focus on consumer protection and market integrity. However, the final decision as to the regulatory settings is one for the government.
ASIC stated that Binance Australia’s derivatives trading license cancellation has no effect on the requirement for Binance to continue as a member of the Australian Financial Complaints Authority until the end of 8 April 2024. Oztures Trading Pty Ltd holds an AFS license with authorizations to issue and make a market in derivatives and foreign exchange contracts, deal in specified financial products on behalf of another person, and provide financial product advice in specified financial products to retail clients and wholesale clients. The ownership of the licensee changed in January 2022 and it commenced offering derivatives as Binance Australia Derivatives in around July 2022.
The cancellation of Binance’s license by ASIC is yet another setback for the cryptocurrency exchange. The regulatory environment for crypto is rapidly changing, and companies must be prepared to comply with a constantly evolving set of rules and regulations. It remains to be seen whether Binance will be able to address the compliance issues that led to the cancellation of its license in Australia and other jurisdictions where it has been the subject of regulatory action.
