Binance, the largest cryptocurrency exchange in the world, has lost its Australian financial services license after an investigation by the Australian Securities and Investments Commission (ASIC). The announcement comes as part of a larger effort by regulators worldwide to increase scrutiny on the largely unregulated cryptocurrency market.
The investigation was launched after Binance announced in February that hundreds of retail customers had been classified as wholesale investors. This led the ASIC to take a closer look at the company’s compliance with Australian regulations.
Joe Longo, the Chair of the ASIC, said that the review was ongoing and focused on potential consumer harms. The ASIC found that Binance had failed to comply with several legal requirements, including paying financial services license fees, maintaining a head office, and keeping appropriate records.
Effective immediately, Binance customers will no longer be able to increase their derivatives positions or open new positions. All existing derivative positions must also be closed by April 21.
Binance acquired its Australian financial services license last year after being a majority shareholder with Oztures Trading for many years prior. The loss of the license means that Binance can no longer legally operate in the Australian market.
The ASIC has stated that Binance’s actions pose a significant risk to investors. ASIC Commissioner Cathie Armour said in a statement, “ASIC has taken action against Binance in order to protect Australian consumers and markets. The company has failed to display compliance with our regulatory requirements and we will take action to ensure that Australia’s financial market remains fair and transparent.”
This is not the first time that Binance has faced regulatory scrutiny. The exchange has also come under fire from regulators in Ontario, Canada and the UK’s Financial Conduct Authority (FCA).
Binance has been criticized for its opaque ownership structure, lack of transparency, and concerns over its AML (anti-money laundering) and CFT (combating the financing of terrorism) procedures. The company has said that it’s committed to working with regulators and has already made changes to its compliance policies and added additional compliance personnel.
The loss of the Australian financial services license is a significant blow to Binance, which has seen explosive growth in recent years. The exchange was founded in 2017 and quickly became the largest cryptocurrency exchange by trading volume. The company, which is based in Malta, has also faced regulatory issues in Japan and the United States.
Binance has not yet commented on the loss of its Australian financial services license, but the company has said that it remains committed to operating in a compliant manner and working with regulators to facilitate the growth of the cryptocurrency market.
