On the 26th of June, 2021, the UK Financial Conduct Authority (FCA) released a report banning ‘Binance Markets Limited’ from undertaking any regulated activities without FCA’s written consent.
‘Binance Markets Limited’ is the UK-based subsidiary of the Binance Group. The firm supports individuals in buying and selling cryptocurrencies using the crypto-exchange platform Binance.com.
Reason for UK FCA’s Ban on Using Binance.com
Crypto-exchange platforms need to have FCA registration to operate in the UK. However, Binance Group does not have the FCA authorization to operate an exchange in the UK.
The FCA also clarified that no entity in the Binance Group holds any form of authorization, registration, or license to conduct regulated activity in the UK.
The UK FCA’s Warning to Crypto Investors & Crypto-Exchanges
In the report, the UK FCA clarified that it does not regulate cryptocurrencies or authorize investments in crypto-assets. Thus, in case of a problem, the investor/consumer will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme.
However, crypto-asset derivatives, such as futures contracts, contracts for difference and options, and crypto-assets that qualify as ‘securities’ are FCA-regulated. Therefore, a firm needs FCA’s authorization to advertise or sell crypto assets and crypto-related products in the UK. Crypto-related advertisements should not promise high returns on crypto investments as they are highly volatile and risky.
UK resident investors are also advised to verify if the crypto-exchange is registered with the FCA through the FCA Register portal.
Binance’s Statement on the UK FCA’s Ban
Binance representative has stated that the FCA notice would not have a “direct impact” on the services it provides. This is mainly because their company Binance.com is based outside the UK. Nor will UK-resident investors using Binance.com to buy and sell cryptocurrencies face any problem while using their crypto-exchange trading platform.
Binance is also under investigation by the U.S. Department of Justice (DOJ) and the US Internal Revenue Service (IRS). Regulatory authorities across the globe are taking measures to bring the unregulated crypto market under control to avoid any future financial crisis.
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