The move by Italy’s market watchdog is the latest in a string of regulatory actions taken by governments against the world’s largest crypto exchange.
Italy announced yesterday that Binance, the world’s largest cryptocurrency exchange by trading volume, is not authorised to carry out its activities in the country, joining a string of global regulatory moves against the platform.
“Companies of the Binance Group are not authorised to provide investment services and activities in Italy,” despite offering information on their website in Italian on derivatives and tokenised versions of stocks, the country’s market watchdog Consob said in a statement.
"Savers are invited to make use of their utmost diligence in order to make their investment choices in full awareness, verifying in advance that the websites through which they make the investment can be attributed to authorised subjects," it said.
A Binance spokesperson said its website did not operate out of Italy and that the Consob notice had no direct impact on its services.
"We take a collaborative approach in working with regulators and we take our compliance obligations very seriously," he added.
Amid growing concerns over the crypto market being used for money laundering and other criminal activities, several national regulators across the world have either banned or warned Binance over its activities.
On June 25, the UK financial regulator barred Binance from conducting any regulated activity and issued a warning to consumers about the platform.
After the decision, British investors have reportedly lost access to withdrawing and depositing pounds through a system known as Faster Payments.
Watchdogs in Thailand, Japan, Germany and the United States have also targeted Binance in recent months. BaFin, the German regulator, said in April that Binance risked being fined for offering so-called "stock tokens" without publishing an investor prospectus.
Last month, South African banks blocked purchase of crypto from international exchanges via customers’ debit and credit cards, a decision which affected Binance.
Why is Binance being investigated?
While regulatory institutions in several countries are unlikely to apply restrictions on crypto trading or decentralised platforms, centralised exchanges like Binance are increasingly coming under the microscope.
One of the leading concerns is lack of control over cryptocurrency trading, as the UK’s Financial Conduct Authority (FCA) has issued warnings that investors could lose all their money in the market due to high levels of volatility. The FCA believes crypto exchanges like Binance are not transparent enough about the possible risks.
Another big concern is money laundering. India’s Enforcement Directorate issued a show cause notice against Binance-owned crypto exchange WazirX for the allegations of money laundering by Chinese nationals.
Binance offers the service of cryptocurrency derivatives trading which enables investors to borrow to leverage the amount of money they invest. These kinds of transactions can be extremely risky for investors, as they could be cashed out in a highly volatile market.
With this in mind, the FCA banned derivatives trading at the start of this year.
There are also some questions over stock tokens which Binance introduced in April.
Stock tokens are digital versions of equities pegged to the value of the relevant share. They are usually bought and sold in fractional units, unlike traditional equities.
German regulator BaFin said in April that Binance risked being fined for offering stock tokens without publishing an investor prospectus.
Binance said on Friday it had stopped selling digital tokens linked to shares, after Hong Kong's financial watchdog became yet another regulator to crack down on the cryptocurrency exchange platform's stock tokens offerings.