Binance has been facing tough regulatory scrutiny worldwide. In response to this, Binance has stated that it is halting derivatives product services in Germany, Italy and Netherlands.
The largest cryptocurrency exchange, Binance, has announced that it will halt futures and derivatives trading in these three European countries. Users in these countries have been given a grace period of three months to close their trading positions on these products.
In the announcement, Binance stated that the move was part of a long-term strategy to gradually evaluate the exchange’s offerings and work closely with its partners to meet user needs.
Halting Derivatives Across Europe
According to the cryptocurrency exchange, it would gradually wind down on derivatives trading across the entire European region. The announcement also mentioned that Europe was an important market for the exchange, but the decision was influenced by the region’s “proactive steps towards harmonizing crypto regulations.”
Clients in Italy, Germany, and Netherlands who have been affected by this move will not open derivatives accounts on Binance. The products that will be unavailable to users in the three countries include futures, leveraged tokens, options, and perpetual.
The recent development is among the few updates that Binance is taking to maintain compliance. In another announcement in July, the exchange giant stated that unverified users would have a lower withdrawal limit. Consequently, the firm lowered the leverage limits to 20x from 100x, developed a tax reporting tool and stopped tokenized stock offerings.
On July 26, Binance delisted all margin-trading pairs for three fiat currencies: the euro, pound sterling, and Australian dollar.
Increased Regulatory Pressure
For a while now, Binance has been the leading cryptocurrency exchange in terms of trading volumes. Data from Coinmarketcap shows that the firm’s trading volumes sit at over $53 billion. OKEx, the second-largest exchange, has trading volumes of around $13 billion in the past 24 hours. This wide gap has increased the popularity and dominance of Binance in the crypto market.
The firm has been facing regulatory backlash worldwide, hence its decision to reduce offerings to risky investment products. The UK Financial Conduct Authority was among the first regulators to ban Binance. This was closely followed by other countries such as Japan, the Cayman Islands, Thailand, and Poland.
According to these regulators, Binance is not licensed to operate within these countries. The Thailand Securities and Exchange Commission (SEC) even filed a criminal charge against Binance for non-compliance.
The recent country to issue a warning to Binance in Malaysia. On July 30, Malaysia’s Security Commission (SC) issued a public remand against the cryptocurrency exchange and issued an order for Binance to pull down its website and mobile app in the country. The order also required Binance to restrict investors from Malaysia from accessing the Binance Telegram group.
The Binance stock token offering has also received intense scrutiny, which led to the exchange halting the service earlier this month. Some stocks listed under this offering included Tesla, Apple, and Microsoft.
Binance CEO Changpeng Zhao recently responded to the ongoing crackdown of the exchange. In light of the mounting pressure, Zhao stated that the exchange would be taking measures to guarantee compliance.
“We understand that many regulators at local levels may have their own positions on crypto, and we welcome the opportunity to engage in a constructive dialogue on local requirements,” Binance said in a tweet.
Earlier this month, Zhao penned an open letter, where he spoke broadly on the matter. He also suggested that Binance was open to hiring a new CEO who had in-depth knowledge about compliance and would help the exchange meet its compliance goals.
Zhao also recently stated that plans were underway for Binance to go public. However, only Binance US, the exchange’s affiliate firm in the United States, would go public. Speaking on the matter, Zhao also noted that the exchange would undergo immense structural changes for it to become a public company.