Finance regulator bans Binance from operating in the UK

The FCA has declared Binance Markets Limited can only participate in any UK activities with prior written consent of the regulator.
Written by Asha Barbaschow, Contributor

Britain's Financial Conduct Authority (FCA) has declared one of the largest cryptocurrency exchanges, Binance, is not permitted to undertake any regulated activity in the United Kingdom.

Binance Group, through its Binance Markets Limited arm, was in operation in the UK, but it now cannot participate in any activities without the prior written consent of the FCA.

While the group is offering UK customers a range of products and services via its Binance.com website, the FCA said no other entity in the group holds any form of UK authorisation, registration, or licence to conduct regulated activity.

Binance in May 2020 acquired FCA-approved Binance Markets Limited. The Group said it has not yet launched its UK business or used its FCA regulatory permissions.

"The FCA UK notice has no direct impact on the services provided on Binance.com. Our relationship with our users has not changed," it said on Twitter.

"We take a collaborative approach in working with regulators and we take our compliance obligations very seriously. We are actively keeping abreast of changing policies, rules and laws in this new space."

See also: The top crypto exchanges you need to know

In announcing the ban, the regulator also issued a warning on cryptocurrency scams.

"Be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products," it wrote.

"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."

The FCA does not regulate cryptoassets like bitcoin or ether. It does, however, regulate certain cryptoasset derivatives, such as futures contracts, contracts for difference, and options, as well as cryptoassets it considers "securities".

"A firm must be authorised by us to advertise or sell these products in the UK," the FCA added.

"Always be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true."

Since January, the sale of derivatives and exchange traded notes (ETNs) "that reference certain types of crypto assets to retail consumers" has been banned in the UK.

Citing the "harm they pose", the FCA at the time said crypto derivatives and ETNs are "ill-suited" to retail consumers as the "inherent nature" of underlying assets, value fluctuations, volatility in cryptoasset price movement, and the evidence of market abuse, financial crime, and scams in the sector.

"These features mean retail consumers might suffer harm from sudden and unexpected losses if they invest in these products," it added.


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