Crypto exchange Binance banned by the UK watchdog
The Financial Conduct Authority also issued a consumer warning about Binance
The UK financial watchdog has banned the UK arm of the world’s biggest crypto exchange, Binance, saying it must not carry out any regulated activities in the UK.
The Financial Conduct Authority (FCA) also issued a consumer warning about both the UK arm and the Binance Group, following a review of the company’s operations in the UK.
The arm of Binance that operates in the UK is Binance Markets Limited (BML). Due to the ban, BML will not be able to conduct any regulated activity in the UK without prior consent from the FCA. The company has until this Wednesday to comply.
The watchdog added: “No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK.”
In addition to announcing the ban, the FCA reiterated a general warning to consumers about the risks from investing in crypto assets.
“Most firms advertising and selling investments in cryptoassets are not authorised by the FCA. This means that if you invest in certain cryptoassets, you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong,” it said.
Trading in cryptocurrency is not regulated in the UK, but crypto exchanges operating in the UK must register with the FCA, which monitors companies for anti-money laundering and counter-terrorist activities. Binance is not on the FCA’s list of registered companies.
Firms operating in the UK are also banned from offering certain regulated investment products including crypto-based contracts for difference (CFDs).
Binance is the largest cryptocurrency in the world by trading volumes. In 2020, the company announced plans to launch services in the UK, gaining much social media attention from the announcement. Binance UK even joined the self-regulated trade group, CryptoUK, as an executive member, alongside firms including Coinbase, Ripple, and CryptoCompare which were already members of the trade group.
The Binance Group is one of the biggest players in the Bitcoin and Ethereum futures market spreading globally. While the group is currently based in the Cayman Islands, it was previously based in Malta and has several entities at locations around the world.
Binance responded on Twitter to the FCA’s ban, saying it had not yet launched its UK business, and the FCA’s notice “has no direct impact on the services we provided on Binance.com”.
It added that it takes a “collaborative approach” in working with regulators and takes its compliance obligations “very seriously”.
Other regulators have flagged Binance
This ban by the FCA is not the first time that Binance has been highlighted by a regulator. The United States Securities and Exchange Commission (SEC) issued a warning similar to the FCA’s to consumers in the US regarding the platform.
In fact, only a day before the FCA’s imposed ban, Binance announced that it was pulling back from Ontario due to “restricted jurisdiction.” However, the withdrawal from the Ontario market consisting of 20 million people came amidst a heavy crackdown by the Ontario Securities Commission (OSC) on exchanges like Kucoin and Poloniex for violating securities laws and their failure to comply with the regulations of the province.
In Japan, the Financial Services Authority (FSA) has issued a warning for operating in the region without prior permission. This warning is the second time in three years that Binance has faced backlash in Japan. This warning was for “operating without a licence”.