News in Brief
- Binance in Brazil Not to Offer Derivatives From Now
- Brazil requires exchanges to carry a ‘license’ to act as a securities intermediary
- Despite being a crypto-friendly country, the Brazilian government has not considered cryptos as legal tender yet.
Bitcoin is the most loved currency in Brazil and the country itself is considered as “crypto paradise’. However, the country has recently ordered the world’s largest crypto exchange to halt its derivative offerings.
Why is Brazil Halting Binance’s Derivatives Offering?
Binance, one of the cryptocurrency exchange giants has been ordered by the Brazilian Securities and Exchange Commission (CVM) to STOP offering derivatives. Binance cannot render the service on its website, app, or any other platform.
Brazilian authorities in their official statement have cited ‘regulatory concern’ as the main reason for this step. They said that derivatives concerning cryptocurrencies are deemed securities and thus Binance should seek its authorization to offer such products.
However, Binance does not hold any such license and hence the commission has restricted it to deal with derivatives. If it fails to comply with the orders, the commission has set a daily fine of R$1000 [Brazilian real] or [$186].
The reason behind this step is assumed to be the increasing interest of the traders in the derivatives which let the traders make bets on the price of cryptocurrencies. And also most of the major crypto exchanges are offering similar services. And hence the warning was let out as Binance’s offerings aim to create crypto-derivatives that copy the traditional markets.
Crypto Folks Slams Decision, Says Penalty is Cheaper
As the news of the Brazilian regulators banning Binance from offering derivatives spread on the social network, the netizens reacted in a very dissimilar way. Well many felt that the penalty of R$1000 which is equal to $186 in USD, is very less.
Brazil – A Cryptocurrency Hub
The Brazilians and the government both have a good approach towards cryptocurrency. However, the government has not considered cryptos as legal tenders but they have not completely ignored them too. Interestingly, they have adopted IMF guidelines on cryptocurrencies and considered them as ‘Assets’.
Brazil’s move towards regulating cryptocurrencies took a major step last year in 2019 when the country’s parliament established a commission to work on this matter. On the other hand, the Central bank of Brazil kept on issuing warnings regarding the risks involved in dealing with cryptocurrencies.
Brazil is one of the most active countries concerning the increasing trading volumes especially Bitcoins. As per some reports, approximately 100,000 bitcoins are traded every day with 400,000 active users. Bitcoin trading also contributes 36% to the overall income of the market.
Brazilian regulators with this move might have initiated the regulatory procedure which was lagging till now. Many more announcements might be coming very shortly as such an active crypto country does require strong regulations.