As scrutiny mounts, crypto exchange Binance to cut derivatives in Europe

As scrutiny mounts, crypto exchange Binance to cut derivatives in Europe

The Biance app is seen on a smartphone in this illustration taken July 13, 2021. REUTERS/Dado Ruvic/Illustration/File Photo

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  • Binance will release derivatives in Europe
  • Users in Germany, the Netherlands and Italy are immediately affected
  • Binance under concerted regulatory pressure

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

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 have grown in popularity among retail investors during the global pandemic, prompting regulators to place trading platforms under increased scrutiny, even though most cryptocurrency exchanges are not regulated.

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Regulators including in Britain, Germany, Hong Kong and Italy, worried about consumer protection and the standard of anti-money laundering controls on crypto exchanges, have increased pressure on Binance, one of the largest crypto exchanges in the world by trading 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 constructive dialogue about local requirements.”

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

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


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, reprimanding him for illegally operating a digital asset exchange in the countryside. Read more

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

Simon Treacy, senior lawyer at Linklaters in London, said financial watchdogs have more leeway to scrutinize crypto companies offering derivatives because futures and other such products typically fall into their scope. Cryptocurrency spot trading, on the other hand, remains mostly unregulated.

“Regulators have more leeway to move quickly in the derivatives space,” he said. “They don’t have to wait for the legislative process to take place to bring derivatives into the 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 trading involving the Australian dollar, Euro, and British pound. Read more

Earlier this month, the exchange stopped selling equity-linked digital tokens, after regulators cracked down on “equity tokens” from the cryptocurrency exchange. 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 is flowing exclusively because of the existence and availability of these products,” said Joseph Edwards of Enigma Securities, a cryptocurrency broker in London.

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

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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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