The United Kingdom bans Binance Cryptocurrency Exchange
The United Kingdom’s Financial Conduct Authority (FCA), which is the country’s financial “police,” has ordered Binance Exchange, one of the world’s biggest cryptocurrency exchanges, to stop all regulated activities in the country.The action taken by FCA is one of the most significant moves any global regulator has made against Binance Exchange. Binance Exchange has until Wednesday evening to confirm it has complied with the demands of the FCA and remove all its advertising.
The FCA also this weekend issued a consumer warning against both the Binance holdings company and Binance Markets Limited, which is a London-based affiliate that is controlled by CEO, Changpeng Zhao and is overseen by the UK regulator.
Why the ban?The FCA stated that Binance Markets Limited, which was established a year ago by the parent company to launch a UK-focused exchange, Binance UK, is not approved under the FCA’s cryptocurrency registration regime, which is required for UK groups offering digital asset services.The FCA stated, “Binance Markets Limited is not permitted to undertake any regulated activity in the UK. No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct a regulated activity in the UK.”Further to the order from the FCA, the regulator ordered Binance to display on its website that, “BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE UK.”
Binance Markets Limited had permission from the FCA to provide consumers with investment services in traditional currencies, something Binance achieved by purchasing a financial company that was already registered with the regulator. The transaction was approved by the FCA last June, according to public documents.The company had also applied to become a registered cryptocurrency company with the FCA but pulled the application. The FCA confirmed that the application had been rescinded, “following intensive engagement from the FCA”, which could mean that Binance may have issues with its controls and practices to prevent money laundering and the financing of terrorism.The intervention is an indication of how regulators are cracking down on the cryptocurrency industry over concerns relating to its potential role in facilitating money laundering and fraud.
What this means for BinanceBinance is one of the most important operators in the cryptocurrency market, offering a wide range of services to customers around the world, including trading in dozens of digital coins, futures, options, stock tokens, as well as savings accounts and lending. It recorded cryptocurrency trading volumes equivalent to $1.5tn last month, according to data from TheBlockCrypto.Although the FCA has restricted Binance from offering services in the UK, British citizens can still access Binance’s services in other jurisdictions.
The FCA’s decision comes after Japan’s Financial Services Agency (FSA) warned last week that Binance was conducting unauthorised trade in cryptocurrencies with Japanese citizens. It is the second time the FSA has warned about Binance after publishing an identical notice in 2018.Germany’s financial police also warned investors in April that Binance had probably violated securities rules over its launch of trading in stock tokens, something the exchange tried unsuccessfully to appeal against.With the trend of Binance’s lack of operating licence, could Nigeria be next?
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