As scrutiny intensifies, Binance crypto exchange to eliminate derivatives in Europe

LONDON, July 30 (Reuters) – Major cryptocurrency exchange Binance on Friday announced it would end its futures and derivatives business in Europe, the platform’s latest move to reduce its product line as pressure from regulators around the world increases.

Binance users in Germany, Italy and the Netherlands will not be able to open new futures or derivatives accounts with immediate effect, the exchange said in a statement posted on its website.

Bitcoin and other cryptocurrencies gained popularity among retail investors during the global pandemic, prompting regulators to subject trading platforms to further scrutiny, even though most crypto exchanges currency is not regulated.

Regulators, including in Britain, Germany, Hong Kong and Italy, concerned about consumer protection and the standard of anti-money laundering controls in crypto exchanges, have stepped up pressure on Binance, l one of the largest crypto exchanges in the world in terms of transaction volumes. Read more

“The European region is a very important market for Binance, and it is taking proactive steps to harmonize crypto regulations, which is a positive sign for the industry,” the exchange said. said on twitter.

“We understand that many regulators at the local level may have their own positions on crypto, and we welcome the opportunity to engage in a constructive dialogue on local requirements.”

Users in Germany, Italy and the Netherlands will, from a date to be announced later, have 90 days to close any open derivatives position, Binance said.

German regulator BaFin declined to comment on Binance’s decision. Italian and Dutch regulators did not immediately respond to requests for comment.

REGULATORY PRESSURE

Binance’s exit from derivatives in Europe is its latest release of a specific crypto product.

Malaysia’s securities regulator became the latest watchdog to target Binance on Friday, berating him for illegally operating a digital asset exchange in the country. Read more

British researcher CryptoCompare said in June that Binance was the world’s largest derivatives exchange, with volumes of $ 1.7 trillion, down about 30% from the previous month.

Simon Treacy, senior lawyer at Linklaters in London, said financial watchdogs have more leeway to curb crypto firms offering derivatives, as futures and other such products generally fall within their purview. ‘application. Cryptocurrency spot trading, on the other hand, remains for the most part unregulated.

“Regulators have more leeway to take swift action in the derivatives area,” he said. “They don’t have to wait for the legislative process to unfold to bring derivatives into scope – that’s what should happen to take action against spot trading.”

Binance CEO Changpeng Zhao said on Tuesday he wanted to improve relations with regulators, and said the exchange would seek their approval and establish a regional headquarters. read more Binance has also stopped offering cryptocurrency margin trades involving the Australian dollar, euro, and pound sterling.

Earlier this month, the exchange stopped selling stock-linked digital tokens, after regulators cracked down on the cryptocurrency exchange’s “stock tokens”. Read more

Market participants said the move could contribute to broader concerns about the future of cryptocurrency derivatives trading for retail players.

“A huge amount of money in the crypto markets flows exclusively due to the existence and availability of such products,” said Joseph Edwards of Enigma Securities, a cryptocurrency broker in London.

“Binance has crowded out large sections of the derivatives market over the past two years – if their withdrawal from this market deepens, the medium-term impact is unlikely to be positive.”

Reporting by Tom Wilson; additional reporting by Krisztian Sandor in Frankfurt; Editing by Tom Arnold, Emelia Sithole-Matarise and Jane Merriman

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