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Summary
Since the beginning of this year, FCA had asked all cryptocurrency-related service firms to follow the anti-money laundering rules.
The FCA issued a warning to the investors of crypto-currencies to be aware of the firms, which are not registered with it.
- Binance has also been ordered to preserve and secure all the records related to the UK’s customers till 2 July and inform the FCA.
UK’s financial regulator Financial Conduct Authority’s sudden clampdown on Binance and its operations has sent shockwaves across the sector. The regulator has asked the world’s largest cryptocurrency exchange to stop its regulated activities and alarmed the consumers from trading on the platform, which is under scanner globally.
On 26 June, the FCA issued a warning to the customers about the Binance platform and said that no other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the country.
Further, the FCA has asked customers to be aware of the adverts online and on social media promising high return on investment in crypto-assets or related products. As most companies advertising and selling investments in crypto-assets are not authorised by the FCA and if the customer invest in these assets they can’t have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme. The customer should invest in crypto assets via the platforms authorized by the FCA to advertise or sell these assets in UK.
Also read: Can you recover scammed cryptocurrency?
The FCA asked Binance Market to remove all advertising and financial promotions until 30 June and it should mention in its website, social media, mobile and desktop application and other channels that it is no longer authorised to conduct any regulated activities in the country. It has also been ordered to preserve and secure all the records related to the UK’s customers till 2 July and inform the FCA.
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Binance’s operations in the UK
Binance Market Ltd is the largest cryptocurrency exchange in the world, which was acquired by the Binance Group, which is registered in Cayman Island, in May 2020 with a motive to provide UK investor a platform for the trading of Crypto-currencies with Pounds and Euro. The Binance.com platform offers a range of crypto-assets as well as allows trading of different products such as digital wallets, digital currencies, saving accounts, futures, securities and even borrowings.
Since the beginning of this year, the financial regulator has been following strict rules and had asked all cryptocurrency-related service firms to follow the anti-money laundering rules. In early June, FCA reported that only five firms had registered them; most firms have not paid heed to its notices.
Also read: Who should invest in cryptocurrencies?
Binance said in a statement that it was not yet using its regulatory permissions and the FCA’s move will not impact the services offered on its website. Its spokesperson said: “We take a collaborative approach in working with regulators and compliance obligation very seriously and we are actively keeping abreast of changing policies, rules and laws in this new space”. Further he said “Binance Market Ltd.” (BML) is a separate legal entity and does not offer any products or services through Binance.com website”.
The FCA do not directly regulate crypto-currencies like Bitcoin or Ether, but it does regulate certain crypto-assets derivatives such as contracts, future contracts, options and all those crypto-assets that the FCA consider as securities.
Also read: 5,000% in 14 months! Can ethereum reach $50,000?
Binance and Controversies
This is not the first time that that Binance has come under scrutiny by regulators.
On 25 June, Japan’s regulator Financial Services Agency said that Binance is operating in the country illegally and they have warned Binance for the second time in three years.
On 26 June, Binance announced that now they are further not operating in Canada as the regulators, Ontario Securities Commission (OSC) accused Binance and several other firms for failing to comply with province regulations.
In the US, Binance Holding (Subsidiary of Binance Group) was investigated by the US Securities and Exchange Commission (SEC) for the money laundering and tax offences and issued warning to consumers regarding the platform in April 2021.
In May, the German financial regulator, BaFin, warned Binance that it could be fined for offering securities tracking digital token without issuing an investor prospectus.
Also read: Crackdown on cryptos: Which countries have voted for and against crypto trading
Even China has curbed mining activity in the crypto sector and have alerted the customers from trading in the digital assets.
In June, Binance US partner company Silvergate Bank decided to stop processing US dollar deposits and withdrawal for Binance from trading cryptocurrencies as it offers its customers with the ability to use local currency to invest in crypto-currencies, as per Bloomberg reports.
The crypto-currency fraud has doubled since last year as the prices of Bitcoins are rising unexpectedly and the National Reporting Center for Cyber crime received around 7,014 complaints in a year till March 2021 as compared to 3,608 complaints previous year. According to the Action Fraud Report, around £113 million was lost to crypto-currency fraud in 2020.
Not just this, around five million banking customers of TSB Bank Plc were barred from trading cryptocurrencies wafter it was reported that the platforms were frequented by fraudsters. The bank had blocked its customers from sending money to Binance and Kraken as scammers were trying to steal money from customers’ e-wallets.
