Binance

In another move by the government to clamp down on cryptocurrency exchanges, the UK financial watchdog has banned Binance from conducting any ‘regulated activity’ in the country. Financial Conduct Authority (FCA) has also asked the company to refrain from promising high returns on cryptocurrency investments. Although the FCA’s ban on Binance won’t have short term implications on the UK crypto investors, on a long term scale, it is expected to bring significant setbacks.

The FCA doesn’t impose regulations on cryptocurrencies and exchange platforms. However, the regulatory body requires all exchanges to be registered with them. Unfortunately, Binance has not registered with FCA and therefore, is not allowed to operate and exchange in the UK. The crypto exchange company is not based in the UK, so despite the crackdowns, the UK residents can still carry on the trading without any trouble, but with a warning notice stating, “BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE U.K.” Due to the imposition of requirements by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA. Binance reacted with a tweet stating that they are aware of recent reports about an FCA UK notice in regulation to Binance Markets Limited (BML). Besides, the notice won’t directly affect or reflect on Binance.com as Binance Markets Limited is an extended wing of the core company.

Why is Binance banned by FCA?

Binance is a famous cryptocurrency exchange and trading platform that is used by a high number of crypto investors. Binance allows trades on cryptocurrencies like Bitcoin, Ethereum, and many other fronts running digital currencies. The platform offers a centralized platform through which crypto investors can participate in decentralized monetary exchange by buying, selling, or getting loans secured by crypto assets.

Binance is already facing regulatory threats from many governments from across the globe. In the US, Binance is under investigation for concerns of illegal transactions or evading taxes. The US Justice Department and Internal Revenue Service is looking into the case. China has also shown resistance and is constantly imposing regulations on crypto trading platforms. Besides, Japan’s Financial Services Agency (FSA) has also warned Binance twice for operating in the country without permission. 

Moving on to the UK, the FCA has ordered Binance to not carry out any regulated activity in the country without the prior written consent from them. The regulatory body further added that “No other entity in the Binance Group holds any form of UK authorization, registration, or license to conduct a regulated activity in the country.” The warning means that if UK residents have invested or are trading using Binance.com, they will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong.

How will this impact Binance?

Binance came out of the trouble unscathed by putting out a statement that there won’t be any direct impact on the services provided by the platform. Despite the FCA’s ban, the market continued to see a price surge. Bitcoin and Ethereum were at the centre of the price raise by experiencing a surge of 4% and 9% respectively. Therefore, crypto enthusiasts predict that the FCA’s crackdown will have very little impact on the crypto trading platform immediately. However, the future might open the door to serious consequences that they have never expected. 

In the short term, the company escaped taking the sword as it is based in Cayman Island. Therefore, it won't face direct implications. Unfortunately, the move could reflect on the crypto investors from the UK. Not altogether, but they might start withdrawing their cryptoassets in case the company undergoes further sanctions.