Binance, the world’s largest cryptocurrency exchange, will cease offering futures and derivatives products to investors in some European countries amid a growing crackdown by regulators.
Users in Germany, the Netherlands and Italy won’t be able to open new futures or derivatives products accounts, with immediate effect, Binance said on 30 July. It indicated that other European countries could be added. At a future date, the exchange will instruct users in those nations with current positions that they have 90 days to close them.
Separately, Malaysia’s securities commission reprimanded Binance and its chief executive, Changpeng Zhao, for operating illegally in the country, despite a previous warning. It ordered Binance to disable its main website and mobile applications in Malaysia within 14 business days, and immediately cease all media and marketing activities in the country.
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“Those who currently have accounts with Binance are strongly urged to immediately cease trading through its platforms and to withdraw all their investments immediately,” the commission said, adding that it had specifically ordered Zhao to ensure Binance’s withdrawal from Malaysia was carried out.
The exchange said that it took its compliance obligations seriously and that its website didn’t operate out of Malaysia.
Regulators globally have placed increased pressure on the exchange, which has no headquarters, in recent weeks. Multiple jurisdictions, including Japan and the Cayman Islands, have recently said it isn’t licensed to operate there.
Binance is the world’s largest crypto exchange by volume for spot trading and derivatives, according to Coinmarketcap.com. Its offering of derivatives and futures contracts have been in high demand from individual investors eager for big and quick gains.
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To make returns attractive, it allowed traders to make oversize bets with little money. Investors could get leverage of 125 to 1 for some futures contracts, meaning they could deposit just 80 cents to amass the equivalent of $100 of bitcoin or another digital currency. Binance said this month that users wouldn’t be able to have leverage levels of over 20 to 1 on futures accounts within the first 60 days of creating their account.
A report released Friday found that hundreds of Americans are trading crypto derivatives on offshore exchanges such as Binance, easily bypassing measures that seek to block them from doing so.
Binance’s chief executive said earlier this week that the company was trying to improve communication with regulators and was looking to set up regional headquarters, as it shifts from a technology startup to a financial institution.
“We want to be fully compliant,” Zhao said. “We want to be licensed everywhere.”
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
This article was published by Dow Jones Newswires
