The UK’s financial regulator the Financial Conduct Authority bans Binance, the world's biggest crypto-currency exchange.
By way of a Consumer warning on Binance Markets Limited and the Binance Group, the Financial Conduct Authority (FCA) has ruled that Binance Markets Limited, a crypto-currency exchange platform which offers users a range of financial products and services, is not permitted to undertake any regulated activity in the UK without the prior written consent of the FCA. The FCA has set a deadline of Wednesday (30 June 2021) for Binance Markets Limited to comply with the ruling.
Although the FCA does not specifically regulate crypto-currencies themselves, it does require crypto-exchanges in the UK, to be registered with itself in relation to anti-money laundering measures. According to the BBC, Binance is not currently registered with the FCA and is therefore not allowed to operate as an exchange in the UK. Following the FCA ruling, Binance is now additionally not allowed to offer regulated services in the UK without prior written FCA consent.
This comes at a time when it can be argued that this sector is generally facing increased pressure from regulators and prosecuting agencies. With specific regard to Binance, it is reported by the BBC that Binance entities have previously faced scrutiny from regulators the Securities and Exchange Commission in the US, the Ontario Securities Commission in Canada and Japan’s Financial Services Agency. On 13 May 2021 it was reported by Reuters that Binance was facing a probe by the Justice Department and the Internal Revenue Services.
Gherson has been monitoring the FCA’s reaction to increased demand from crypto-asset platforms seeking FCA registration, and the potential issues facing those seeking registration. Some of our previous blogs cover the temporary registration regime for crypto firms, as well as a general breakdown of what regulatory requirements face those wishing to trade in crypto-assets.
There is concern within the crypto-asset community that such authorisation from bodies like the FCA inherently centralise this space, which almost runs contrary to the inherent design of decentralisation. However, of course the FCA must ensure that it is doing all it can to protect consumers in this novel and often confusing area.
Gherson has previously explored the rise of the Central Bank Digital Currency (CBDC) and the subsequent increase in crypto regulation.
As regulatory bodies and governments begin working more and more closely with the crypto market, such issues will need to be worked out, and quickly. One hopes this process is done transparently, and with an end goal of aligning the regulatory framework with how the technology actually works.
For those who would like advice on this issue, our specialist regulatory and compliance team can guide individuals and companies through the process. Do not hesitate to contact us, send us an e-mail, or alternatively, follow us on Twitter, Facebook, or LinkedIn to stay-up-to-date.
The information in this blog is for general information purposes only and does not purport to be comprehensive or to provide legal advice. Whilst every effort is made to ensure the information and law is current as of the date of publication it should be stressed that, due to the passage of time, this does not necessarily reflect the present legal position. Gherson accepts no responsibility for loss which may arise from accessing or reliance on information contained in this blog. For formal advice on the current law please don’t hesitate to contact Gherson. Legal advice is only provided pursuant to a written agreement, identified as such, and signed by the client and by or on behalf of Gherson.