Cryptographic exchange binance to rewind derivatives in Europe as scrutiny progresses


London — Major crypto exchange Binance announced on Friday that it will close its futures and derivatives operations across Europe. This is the latest move for the platform to dial back its product range as pressure from regulators around the world increases.

Binance users in Germany, Italy and the Netherlands will not be able to open accounts for new futures and derivatives products immediately, the exchange said in a statement on its website.

Bitcoin and other cryptocurrencies have skyrocketed in popularity among retail investors during the global epidemic, and regulators closely monitor trading platforms, even though most cryptocurrency transactions are unregulated. It came to be.

Regulators, including the UK, Germany, Hong Kong and Italy, are concerned about consumer protection and standards for anti-money laundering checks on crypto exchanges, making them one of the world’s largest crypto exchanges in terms of trading volume. I’m putting pressure on a Binance.

“Europe is a very important market for Binance and we are taking positive steps towards harmonization of cryptography, which is a positive sign for the industry,” the exchange said on Twitter.

“We understand that many local level regulators may have their own position on cryptography and welcome the opportunity to engage in constructive dialogue on local requirements.”

According to Binance, users in Germany, Italy and the Netherlands will close outstanding derivative positions within 90 days of the date announced at a later date.

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

Regulatory pressure

Binance’s withdrawal from derivatives in Europe is the latest withdrawal from certain crypto products.

Malaysian securities regulators became the latest watchdog targeting Binance on Friday, accusing Binance of operating digital asset exchanges illegally in the country.

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

Simon Treacy, a senior lawyer at Linklaters in London, said that financial watchdogs have a wider range to curb crypto companies offering derivatives, as futures and other such products are usually included in that range. I said there is. In contrast, cryptocurrency spot trading is largely unregulated.

“Regulators have more room to take swift action in the field of derivatives,” he said. “They don’t have to wait for the legislative process to unfold to bring derivatives into range. That’s what happens to take action on spot contracts.”

Binance CEO Changpeng Zhao said on Tuesday that he wanted to improve relations with regulators and that the exchange would seek regulatory approval and set up a regional headquarters. Binance has also stopped offering cryptocurrency margin trading, including the Australian dollar, euro and pound sterling.

Earlier this month, the exchange stopped selling stock-linked digital tokens after regulators cracked down on “stock tokens” on the cryptocurrency exchange platform.[”

Market players said the move may contribute to wider concerns about the future of cryptocurrency derivatives trading for retail players.

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

“Binance [has] Over the last few years, most of the derivatives market has been crowded. If the withdrawal from these markets deepens, the medium-term impact is unlikely to be positive. “

Tom Wilson