Binance faces more regulatory backlash; Indian authorities reportedly latest to initiate probe

Prominent cryptocurrency exchange, Binance has announced the discontinuation its futures and derivatives services across Europe. Binance announced this on Twitter through a series of tweets, which noted,

“Today we’re announcing that we plan to wind down our derivatives products offerings across the European region, commencing with the Netherlands, Germany, and Italy.”

This update comes after Binance faces increased regulatory scrutiny in various countries. Europe is one of the important markets for Binance and the continent as a whole has been supportive of crypto technology by harmonizing crypto regulations.

Although Binance posted about stopping its derivatives products across Europe, it has only mentioned three countries among 44 in the continent.

The official announcement stated,

“With immediate effect, users from these countries will not be able to open new futures or derivatives products accounts. With effect from a later date to be announced in a further notice, users from these countries will have 90 days to close their open positions.”

This was the most recent step Binance took in trying to mend its relationships with the regulators. Among other things, the exchange had earlier reduced its leverage limits from 100x to 20x. The withdrawals limit was also reduced for unverified users. It halted its tokenized stocks offering, and launched a tax reporting tool at the same time. All these efforts do comply with various regulatory laws. However, countries such as the United Kingdom, Singapore, Japan, and Italy have remained wary of the exchange’s practices.

In its tweet, Binance also acknowledged these reservations, stating,

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

The CEO of Binance, Changpeng Zhao aka CZ maintained his position to meet the regulatory requirements and has also revealed intentions to hire a contingent CEO holding a strong compliance background.

Meanwhile, India’s Enforcement Directorate summoned Binance executives for questioning and is awaiting a response, as per reports. The anti-money laundering agency is examining if Binance Holdings Ltd. has a role to play in an ongoing investigation involving betting apps. Binance, on the other hand, denied having received such summons and maintained that the same was directed to WazirX, a cryptocurrency exchange in India, acquired by Binance in 2019.  Binance issued a statement clarifying the same.

“We did not receive any summons in June or July of this year. As per available info in the public domain, the summons was directed to only WazirX.”

There could be major changes visible in the Binance hierarchy if the regulatory concerns increase. Earlier, BitMEX CEO Arthur Hayes had also surrendered his position as he was facing charges of flouting banking laws. However, CZ has not been directly named in any of the issues raised by the regulators.

As Binance tries to repair its relationship with the regulators, will the regulators revert with the same effort? Hard to say.