Binance Derivatives will no longer be open to new users in the Netherlands, Germany, Italy and Malaysia the company has announced. Users from these countries will, from a date to be announced later, have 90 days to close their open positions.
The move comes amid growing pressure on Binance from financial authorities across the world, including Britain, Germany, Hong Kong and Italy. Earlier this week, Binance had announced it would suspend margin borrowing for large cryptocurrencies. The platform’s CEO, Changpeng Zhao, also announced that they would be limiting the maximum leverage for trading cryptocurrency futures for new users by 20 times.
The Binance derivatives purge!
The regulatory difficulties Binance has been experiencing recently can be traced back to when it issued stock tokens in first half of 2021. Starting with Tesla, these ‘tokenized stocks’ could be worth a fractional amount of the corresponding stock, kept in reserve. However, these offerings alarmed Germany’s financial regulator BaFin. Following the scrutiny that came in the wake of this initial inquiry, Binance recently dropped its stock token offerings.
Malaysia’s Securities Commission had issued a public reprove against the company and ordered it to disable the website and mobile apps in the country. According to the commission, Binance is “illegally operating a digital asset exchange.” The country’s laws demand that all such exchanges must be registered under the Seurities Commission. Binance also needs to halt marketing activities and prevent Malaysian investors accessing its Telegram group.
Although Binance’s initial issue was its stock tokens, this drew further scrutiny from financial watchdogs. The UK’s Financial Conduct Authority (FCA) issued a consumer warning against Binance in June. This was swiftly followed by similar warnings from financial authorities in Japan, Canada, Thailand, Italy, Lithuania and Hong Kong.