The intervention of the Financial Conduct Authority in recent days is one of the most significant steps a global regulator has taken against Binance, a sprawling digital asset firm with affiliates around the world. The exchange has until Wednesday evening to confirm that it has complied with the watchdog’s requirements and has removed its advertising.
The intervention is a sign of how regulators are cracking down on the cryptocurrency industry over concerns over its potential role in illicit activities such as money laundering and fraud, and often protecting low of consumers.
The FCA also issued a consumer warning this weekend against Cayman Islands-registered holding company Binance and Binance Markets Limited, a London-based subsidiary that is controlled by chief executive Changpeng Zhao and overseen by the UK regulator.
“Binance Markets Limited is not authorized to undertake any regulated activity in the UK,” FCA said, adding that “no other entity in the Binance group holds any form of authorization, registration or license. in the United Kingdom to conduct a regulated activity in the United Kingdom.
The group did not immediately respond to a request for comment from FT, but previously said it “takes its compliance obligations very seriously and is committed to following the requirements of local regulators wherever we operate.”
Binance Markets Limited is not approved under the FCA Cryptocurrency Registration Scheme, which is required for UK groups offering digital asset services.
The entity had applied to become a cryptocurrency company registered with the regulator, but withdrew that request last month “following intensive engagement by the FCA,” according to a spokesperson for the watchdog and two people familiar with the situation.
The FCA’s objective in deciding whether or not to approve such requests is based on a review of controls and practices aimed at preventing money laundering and terrorist financing.
Binance is one of the largest operators in the burgeoning crypto market, providing a wide range of services to clients around the world, including trading dozens of digital coins, futures, options, tokens and tokens. ‘stocks, as well as savings accounts and loans. . It recorded crypto transaction volumes equivalent to $ 1.5 billion last month, according to data from TheBlockCrypto.
As part of the FCA’s actions, the regulator ordered Binance to post by next Wednesday on its website that “BINANCE MARKETS LIMITED IS NOT AUTHORIZED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE UK.” Binance Markets Limited must also “secure and maintain all records and / or information. . . relating to all UK consumers of its systems’ and cease all advertising and financial promotions.
Binance Markets Limited was formed a year ago as part of a larger group plan to launch a UK-focused exchange, Binance UK, which would have been ‘isolated’ from the larger global operation. wide, according to public documents and both people. familiar with the subject. Although the FCA has banned Binance from offering services in the UK, UK citizens can still access Binance’s services in other jurisdictions.
London-based Binance Markets Limited had FCA clearance to provide consumers with traditional currency investing services, which 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 move comes after the Financial Services Agency of Japan warned last week that Binance was engaging in unauthorized cryptocurrency trading with Japanese citizens. This is the second time the FSA has warned Binance after issuing an identical notice in 2018.
The German financial watchdog warned investors in April that Binance likely broke securities rules when it started trading in stock tokens, which the exchange tried unsuccessfully to appeal.
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Additional reporting by Robin Harding in Tokyo