ASIC cancels financial service license for Binance Australia Derivatives

The Australian Securities and Investments Commission (ASIC) has cancelled the financial services license for Binance Australia Derivatives.

The license held by Oztures Trading Pty Ltd was cancelled in response to a request to cancel received from Binance.

Following the cancellation, with effect from April 14, clients will not be able to increase derivatives positions or open new positions with Binance.

Binance will require clients to close any existing derivative positions before April 21; on April 21 Binance will close any remaining open positions.

Crypto derivatives work similar to traditional derivatives where a buyer and seller enter into a deal to sell an underlying asset. These assets are sold at a predetermined time and price. These derivatives do not have an inherent value but rely on the value of the underlying asset.

Joe Longo, chair at ASIC 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.”

He added, “Our targeted review of these matters is ongoing, including focus on the extent of consumer harms.”

A Binance spokesperson said, "Following recent engagement with ASIC, Binance has 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. 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.”

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 the Australian Financial Complaints Authority until the end of April 8, 2024.  

ASIC has been conducting a targeted review of Binance financial services business in Australia, including its classification of retail and wholesale clients.

On March 29, ASIC issued a notice of hearing under s915C of the Corporations Act 2001 to consider whether ASIC should cancel or suspend the AFS licence held by Oztures Trading Pty Ltd.

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.

Longo said, “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.”

ASIC said it continues to take action to disrupt and deter harm and misconduct within its jurisdiction.