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Binance logo at a Maltese blockchain fair
Photo: Darrin Zammit Lupi / REUTERS
The British financial regulator has banned Binance, one of the largest exchanges for cryptocurrencies in the world, from trading subject to regulatory requirements and warned users of the platform, which is being watched by authorities around the world.
In a report dated Saturday, the Financial Conduct Authority (FCA) announced that Binance's UK subsidiary Binance Markets Ltd "may no longer engage in any regulated activities with immediate effect without the prior written consent of the FCA".
Binance did not respond to a request for comment on Sunday.
While trading in cryptocurrencies like Bitcoin is not regulated in the UK, services like trading derivatives on these assets fall under financial supervision.
Crypto investments "that we would count as securities" are now also banned.
This could include digital tokens, for example.
The FCA requires Binance to post a warning on its website and social media presence by June 30th: "Binance Markets Limited is not licensed to conduct any regulated activity in the UK."
In addition, the company must secure its entire communication with British customers and hold it for the authority.
Compliance with this rule should be reported to the FCA by July 2nd.
Trading volume of $ 1.5 trillion a month - unsupervised
The regulator did not explain why it is taking these measures against Binance.
The company had previously emphasized that it took its legal obligations "very seriously" and "collaborated with supervisory and enforcement authorities".
The FCA is tightening its oversight of cryptocurrency trading, which has increased dramatically in the UK and worldwide this year.
In May alone, Binance had a trading volume of $ 1.5 trillion.
Since January, the FCA has required all companies that offer crypto services to register and prove that they comply with anti-money laundering guidelines.
At the beginning of June, however, the authority said that so far only five companies had registered and the majority were not complying with the regulations.
The "Financial Times" reported on Sunday, citing insiders, that Binance had applied for registration, but withdrew the application after the dialogue with the FCA.
No address for the global headquarters
The Japanese supervisory authority said on its website on Friday that Binance was legally operating in Japan. In other countries, however, the authorities are scrutinizing the company more closely. In May, Bloomberg reported that money laundering and tax offenses officials at the US Department of Justice and the IRS had requested information from Binance insiders. The German financial regulator Bafin warned in April that Binance was risking a fine for offering digital tokens without submitting an investor prospectus explaining the risks.
Binance was founded in 2017 by the Canadian crypto billionaire
Changpeng Zhao
in China and within a few months rose to become the platform with the largest trading volume. Since then, the company's headquarters have changed several times after the authorities demanded more control. In 2020, Malta’s financial regulator made it clear that it did not feel responsible for Binance. Malta is a member of the European Union, but on Wednesday the global Financial Action Task Force (FATF) put it on the "gray list" of countries to be observed for lack of cooperation against money laundering. Most recently, Zhao stated that Binance has no headquarters at all. The FCA located the holding company in the Cayman Islands, a British crown colony in the Caribbean.
An account attributed to Binance is considered to be the largest holder of the controversial cryptocurrency Tether.
According to the "Tether Rich List" published by the Tether makers, who are also behind the also controversial Bitfinex exchange, there are 17.2 billion tethers on the Binance account, which are said to be worth US dollars, but hardly covered by it are.
ak / Reuters