- The Financial Conduct Authority warned Binance it can’t operate regulated activities without approval.
- But the ban has no direct impact on UK users trading crypto on Binance.com, the company said.
- While the FCA does not directly regulate crypto trading, it has oversight of derivative services.
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The UK’s financial watchdog has banned Binance’s regulated operations, but British cryptocurrency investors can continue using the company’s online exchange platform for regular trading.
The Financial Conduct Authority on Saturday warned Binance that Binance Markets, the company’s only UK-regulated entity, can’t carry out regulated activities without “prior written consent”, even if it has permissions in place.
Cryptocurrency trading is not directly regulated in the UK, but derivative services – like futures and options contracts – require authorization from the financial services watchdog.
“While we don’t regulate cryptoassets like bitcoin or ether, we do regulate certain cryptoasset derivatives (such as futures contracts, contracts for difference and options), as well as those cryptoassets we would consider ‘securities.’ A firm must be authorised by us to advertise or sell these products in the UK,” the FCA said in a statement.
Binance’s main exchange is not UK-based, so people in the country who buy and sell cryptocurrencies via its platform will not be affected by the ban, the crypto exchange provider said.
“The FCA UK notice has no direct impact on the services provided on Binance.com,” a Binance spokesperson told Insider. “Our relationship with our users has not changed.”
Binance Markets, acquired by the Binance Group in May last year, is a separate legal entity and doesn’t offer any products or services via the Binance.com website, the company said.
The company was ordered to share the FCA warning, and to remove any ads or promotions by end of day Wednesday.
“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,” the Binance spokesperson said.
Binance intended to launch a UK-based trading platform last year, but has yet to obtain approval from the FCA. It is among 90% of crypto businesses to have withdrawn its application after “intensive engagement” with the regulator, crypto news site Decrypt reported. The UK’s strict protocols for complying with anti-money-laundering rules prompted most of those companies to pull back, it reported.
The FCA’s move underlines that Binance continued to offer derivates-trading services to UK customers even after the watchdog prohibited such services to retail consumers in January.
The order to cease all regulated activities in the UK sends a clear signal not only to Binance but to the entire crypto market, Rabya Anwar, partner at law firm Keystone Law, told Insider. “Other cryptocurrency exchanges and related market participants should watch closely, prepare carefully and be under no illusions – Binance is unlikely to be the only target,” she said.
The regulator may have also wanted to make it clear to Binance that anyone looking to provide cryptocurrency investment products in the UK must do so in a secure and regulated environment.
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