The UK Financial Conduct Authority (FCA) has issued a warning on Binance
UPDATE (August 2021): Binance has resumed GBP deposits and withdrawals via Visa Card.
In short: the FCA has ordered Binance to stop offering regulated products (such as options and futures) to UK customers. Other outlets are reporting that an FCA spokesperson clarified that UK consumers can continue to interact with Binance.com.
On the 25th of June, the FCA issued a statement explaining that Binance Markets Limited is not permitted to undertake any regulated activity in the UK.
Binance Markets Limited (BML) is a separate legal entity, according to a statement made by Binance on Twitter. The tweet goes on to explain that BML “does not offer any products or services via the Binance.com website.”
The Binance Group acquired BML last spring, but has not yet launched the UK business. The company followed a similar trajectory in the launch of Binance US.
Binance has been given until Wednesday the 30th of June to adhere to a number of demands by the regulator, including the display of the following on its website:
BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE UK.
The firm must also remove all advertising and financial promotions by Wednesday evening.
BML must also “secure and preserve all records and/or information […] relating to all UK customers form its systems,” and confirm to the FCA that this has been completed by the 2nd of July.
The FCA statement takes aim at ‘regulated activities.’ Such activities include cryptoasset derivatives like futures contracts and options, plus those cryptos that the FCA considers securities.
In their statement, the FCA clarifies that they “don’t regulate cryptoassets like Bitcoin or Ether.” Most firms allowing users to buy and sell cryptoassets are not authorised by the FCA, meaning their clients are not covered by the Financial Services Compensation Scheme (FSCS), nor can they access the Financial Ombudsman Service.
“Our relationship with users has not changed”
Binance assured users that there was no change in their relationship; and that the company takes “a collaborative approach in working with regulators,” and that they take compliance obligations “very seriously.”
Decrypt reports that an FCA spokesperson clarified that the ban only applies to BML. According to Decrypt:
The spokesperson clarified that “UK consumers can continue to interact” with Binance Group, the wider, international collection of Binance companies that maintains no official headquarters. That means that Binance’s customers in the UK can trade on Binance as normal—nothing changes.
Also speaking to Decrypt, a Binance customer support representative explained that Binance is providing services to UK customers, not BML, which is the subject of the FCA’s statement.
Why has the FCA Stepped in Now?
The impetus for the FCA’s statement is unclear, though the watchdog has been stepping up its rhetoric in recent months. In October last year, the FCA banned the sale of crypto derivatives to retail consumers, for example.
Unperturbed, Binance continued marketing their services to UK residents. Part of this marketing included the purchasing of ad space in prominent out-of-home locations, notably in London.