UK Financial Watchdog Bans Crypto Exchange, Binance

The United Kingdom’s financial watchdog, the Financial Conduct
Authority (FCA), has ordered Binance to stop all regulated
activities in Britain and imposed stringent requirements in a
stinging rebuke of one of the world’s biggest cryptocurrency
exchanges.

According to London-based Financial Times, the intervention by
the FCA in recent days has been one of the most significant moves
any global regulator has made against Binance, a sprawling digital
asset firm with subsidiaries around the world.

The exchange has until Wednesday to confirm it has complied with
the watchdog’s demands.

The report said the intervention was a sign of how regulators
were cracking down on the cryptocurrency industry over concerns
relating to its potential role in illicit activities such as money
laundering and fraud, and over often weak consumer protection.

In Nigeria, the Central Bank of Nigeria (CBN) had in February
directed banks and other financial institutions to close any
accounts dealing in cryptocurrency or facilitating payment for
cryptocurrency exchange. Binance was also affected then.

The CBN had then stated that it was investigating the company’s
bank accounts with the intention of blocking those with suspicious
transactions and fraud.

But the FCA at the weekend issued a consumer warning against
both the Cayman Islands-registered Binance Holdings Company and
Binance Markets Limited, a London-based affiliate that is
controlled by Chief Executive Changpeng Zhao and is overseen by the
UK regulator.

“Binance Markets Limited is not permitted to undertake any
regulated activity in the UK,” the FCA said, adding: “No other
entity in the Binance Group holds any form of UK authorisation,
registration or licence to conduct a regulated activity in the
UK.”

The group did not immediately respond to an FT request for
comment, but has previously said it “takes its compliance
obligations very seriously, and is committed to following local
regulatory requirements wherever we operate.”

Binance Markets Limited is not approved under the FCA’s
cryptocurrency registration regime, which is required for UK groups
offering digital asset services.

The entity had applied to become a registered cryptocurrency
company with the regulator, but pulled that application last month
according to two people familiar with the situation. The watchdog
confirmed the application had been dropped “following intensive
engagement from the FCA”.

The FCA’s focus in deciding whether or not to approve such
applications is based on a review of controls and practices to
prevent money laundering and the financing of terrorism.

Binance is one of the most important operators in the
fast-emerging crypto 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 crypto trading volumes equivalent to $1.5 trillion
last month, according to data from TheBlockCrypto.

As part of the FCA’s actions, the regulator ordered Binance to
display by next Wednesday on its website that, “Binance Markets
Limited is not permitted to undertake any regulated activity in the
UK.”

Binance Markets Limited also must “secure and preserve all
records and/or information . . . relating to all UK consumers from
its systems” and halt any advertising and financial promotions.

London-based 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 FCA’s decision came after Japan’s Financial Services Agency
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 watchdog 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.

The United Kingdom’s financial watchdog, the Financial Conduct
Authority (FCA), has ordered Binance to stop all regulated
activities in Britain and imposed stringent requirements in a
stinging rebuke of one of the world’s biggest cryptocurrency
exchanges.

According to London-based Financial Times, the intervention by
the FCA in recent days has been one of the most significant moves
any global regulator has made against Binance, a sprawling digital
asset firm with subsidiaries around the world.

The exchange has until Wednesday to confirm it has complied with
the watchdog’s demands.

The report said the intervention was a sign of how regulators
were cracking down on the cryptocurrency industry over concerns
relating to its potential role in illicit activities such as money
laundering and fraud, and over often weak consumer protection.

In Nigeria, the Central Bank of Nigeria (CBN) had in February
directed banks and other financial institutions to close any
accounts dealing in cryptocurrency or facilitating payment for
cryptocurrency exchange. Binance was also affected then.

The CBN had then stated that it was investigating the company’s
bank accounts with the intention of blocking those with suspicious
transactions and fraud.

But the FCA at the weekend issued a consumer warning against
both the Cayman Islands-registered Binance Holdings Company and
Binance Markets Limited, a London-based affiliate that is
controlled by Chief Executive Changpeng Zhao and is overseen by the
UK regulator.

“Binance Markets Limited is not permitted to undertake any
regulated activity in the UK,” the FCA said, adding: “No other
entity in the Binance Group holds any form of UK authorisation,
registration or licence to conduct a regulated activity in the
UK.”

The group did not immediately respond to an FT request for
comment, but has previously said it “takes its compliance
obligations very seriously, and is committed to following local
regulatory requirements wherever we operate.”

Binance Markets Limited is not approved under the FCA’s
cryptocurrency registration regime, which is required for UK groups
offering digital asset services.

The entity had applied to become a registered cryptocurrency
company with the regulator, but pulled that application last month
according to two people familiar with the situation. The watchdog
confirmed the application had been dropped “following intensive
engagement from the FCA”.

The FCA’s focus in deciding whether or not to approve such
applications is based on a review of controls and practices to
prevent money laundering and the financing of terrorism.

Binance is one of the most important operators in the
fast-emerging crypto 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 crypto trading volumes equivalent to $1.5 trillion
last month, according to data from TheBlockCrypto.

As part of the FCA’s actions, the regulator ordered Binance to
display by next Wednesday on its website that, “Binance Markets
Limited is not permitted to undertake any regulated activity in the
UK.”

Binance Markets Limited also must “secure and preserve all
records and/or information . . . relating to all UK consumers from
its systems” and halt any advertising and financial promotions.

London-based 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 FCA’s decision came after Japan’s Financial Services Agency
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 watchdog 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.