In the latest among a string of recent bans and warnings against Cryptocurrency exchange giants Binance, the UK top financial regulator, the Financial Conduct Authority (FCA) has banned the exchange from operating in the UK. Crypto traders in the United Kingdom can however continue using the exchange that was founded in 2017.
This is a bit confusing, right? Yea, we know.
According to Decrypt, an FCA spokesperson clarified the situation. The spokesperson said the ban would only apply to Binance Markets Limited, the English incorporation of the exchange that the company has failed to register with the FCA.
The FCA in a notice dated June 25, said Binance Markets Limited, “must not without the prior written consent of the FCA, carry out any regulated activities with immediate effect”. In a bid to clear the air and reduce panic, Binance in a statement said Binance Markets, which was acquired in June 2020 was not using its regulatory permissions yet. The statement went on to say that the services offered on Binance.com would not be impacted by the FCA’s move.
Binance Group’s cryptocurrency exchange platform is not based in the UK, so despite the FCA order, residents of the UK can continue using the website for buying and selling their cryptocurrencies. A spokesperson for the exchange said, “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.”
Governments pushing back against Binance
This move by the United Kingdom’s FCA comes in a period where financial regulators around the world are pushing back against the Cayman Island-based crypto platform.
In April, BaFin, a financial watchdog in Germany had warned investors about investing in tokens on the exchange platform. In a published note, the Bonn-based outfit said that Binance may have violated securities rules in the course of its launch of trading in stock tokens. They stated that tokens that tracked the movement of shares in companies like Coinbase, MicroStrategy and Tesla represented Securities that required a prospectus that had not been issued.
On Saturday, June 26th, Binance closed its shop in Canada’s most populous province, Ontario. The biggest centralized cryptocurrency exchange in the world apparently decided to pull out of Ontario as a precautionary measure to escape the fate other crypto exchanges — that had actions filed against them for allegedly failing to comply with Ontario Securities laws — had met.
In the last month, the Ontario Securities Commission (OSC) had laid allegations against crypto exchanges Bybit, Poloniex and Kucoin, claiming they failed to comply with regulations. After exchange platforms were warmed on March 29th and given until April 19th to discuss with the OSC on how to bring their operations into compliance or face regulatory actions, it is not clear whether the exchange had reached out to the OSC before deciding to pull out completely.
When contacted, a company representative said, “We take our legal obligation very seriously and engage with regulators and law enforcement in a collaborative fashion.” Ontario-based users of the platform were advised by the company to close out all their open positions and to withdraw their funds before the end of the year.
The Financial Services Agency (FSA) of Japan issued a warning on Friday, June 25th that Binance is not registered to do business in Japan and that the company is operating in the country without permission. The FSA had last month issued a similar warning to Bybit. “Binance does not currently hold exchange operations in Japan nor do we actively solicit Japanese users,” a spokesperson from the exchange said.
Implications on the market
The implications of these bans on Binance on the market doesn’t amount to much because for one, crypto is unregulated and people can still purchase and sell cryptocurrencies in the UK. Spot trading is still running smoothly on the Binance platform. The only issue here is the FCA prohibiting Futures and other derivatives trading because those are regulated activities. All these prohibitions are of course until Binance meets the requirements set by the FCA.
The same thing goes for the warnings and bans on Binance in other nations. These aren’t the bans on cryptocurrencies in general but on a particular exchange platform; Binance.
Except a user has assets/is trading in Derivatives, Futures using leverages, there is nothing to worry about. These trading options are regulated in the UK and until Binance reaches the regulatory requirements, those options won’t be available to be traded on in the UK.