The UK Financial Conduct Authority (FCA), the country’s watchdog for financial activities, had on Saturday, restricted crypto exchange, Binance Markets Limited, from carrying out regulated services in Britain without express approval.
Binance Markets Limited is part of the wider Binance Group, the world largest cryptocurrency exchange and the issuer of (BNB) Binance coin. Its platform, Binance.com is an online centralized exchange that offers users a range of financial products and services, including purchasing and trading a wide range of digital currencies, as well as digital wallets, futures, securities, savings accounts and even lending.
Binance does not have a single location for its headquarters, but it allows users to trade crypto derivatives – including futures and options which require approval.
The UK regulator said “Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA,” and It has until Wednesday to comply with the ruling. It also warned the UK division to stop any form of advertising by 30 June, after adivising the public to “be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products.”
“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,'” the FCA statement said. “A firm must be authorized by us to advertise or sell these products in the UK.”
But Binance has an exchange registered in the Cayman Island, which means the decision will not stop UK crypto traders from using Binance exchange.
However, the FCA decision has added to the growing push back against crypto exchanges by governments globally, signaling intent by the UK government to crackdown on crypto activities sooner or later.
In April, British authorities announced that they are exploring the possibility of creating a new digital currency that Treasury chief Rishi Sunak touted as “Britcoin.” It is part of the global trend of central banks creating digital currencies to counter the influence of cryptocurrencies and protect their traditional financial system.
Following that announcement, Britain is making for the first time, a crypto regulatory move. BBC’s tech analyst Rory Cellan-Jones said “the FCA is sending a strong signal that it is worried about the dangers of investing in cryptocurrencies in general,” and the decision means the government is becoming overly concerned about their potential use as a cover for illicit activity – and it wants consumers to be very careful indeed.
The FCA also forbids Binance from setting up an exchange in the UK and warns consumers to check and withdraw from any exchange that is not registered in the UK. It also ordered the exchange to keep record of UK customers and be ready to hand them over to the authorities upon request.
China followed a similar pattern of warning consumers about the potential dangers of using cryptocurrencies while working on e-yuan, its digital currency, before it cracked down on cryptocurrencies.
While there have been similar situations in other countries like Japan, where the authorities have warned Binance about operating in the country without authorization, and Canada, where the platform was forced to leave Ontario in December, due to regulatory dispute, there is growing speculation that FCA’s move has more than exchange regulatory intent.