FTX Australia's License Revoked by Nation's Financial Watchdog

The license permitting the operation of FTX Australia, the local wing of the bankrupt cryptocurrency platform FTX, has been permanently revoked by the country's financial watchdog.

The decision from the Australian Securities and Investments Commission (ASIC) was unveiled on July 19th.

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This move, which officially took effect on July 14th, permits FTX Australia to provide limited financial services. It gives the company until July 12th, 2024, to conclude its ongoing affairs with clients.

Providing clarity, the ASIC stated that within this period, FTX Australia would still be obligated to establish compensation schemes for its clients. This comes as no surprise as FTX Australia catered to roughly 30,000 individual customers and aided 132 domestic firms.

In November of 2022, FTX Australia's Australian Financial Services (AFS) license was temporarily suspended. This license was a crucial component for FTX Australia, permitting them to formulate derivatives and forge foreign exchange contracts tailored for local clients.

Notably, this suspension was enforced within days of the bankruptcy announcement of the Bahamas-based parent company FTX on November 11th, 2022.

Last month, a report was presented to a US bankruptcy court by the restructuring chief of the FTX global entity. The report claimed that approximately $7 billion in liquid assets had been recouped, yet an estimated $8.7 billion in customer assets had supposedly been mishandled and lost.

Reports are suggesting a potential revival of FTX, where the restructuring team is currently in dialogue with parties who might be interested in financial backing.

The withdrawal of FTX Australia's operating license by the ASIC underscores the intricate balance between fostering innovation in fintech and ensuring consumer protection. This development may catalyze stricter regulatory scrutiny in the dynamic field of cryptocurrency exchanges.