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Binance Crypto Marketplace “Banned” in the UK

Binance, one of the worlds largest cryptocurrency exchanges has been “banned” in the UK after receiving a warning from the Financial Conduct Authority. 

The FCA ruled that the company cannot conduct any “regulated activity” in the UK, as must pull all advertising from the country by June 30. This ruling also came with a warning to the public, advising consumers to be wary of adverts promising high returns on crypto assets, as part of an ongoing crackdown of crypto by regulators.  

In response to the announcement, Binance has said that the FCA notice will have no direct impact on the services it provides from its website. As the crypto exchange is not UK-based, they have advised will be no impact on UK residents who use the website to purchase and sell cryptocurrencies. 

However, despite Binance’s assurances that this move will not affect their services, there have been some reports from UK customers who have been blocked out from withdrawing and depositing through the marketplace, as well as the Faster Payments Network moving to suspend Binance payments.

Binance is one of the largest cryptocurrency exchanges in the world, offering a platform to trade various cryptocurrencies. Founded in 2017, Binance is based in the Cayman Islands, Binance also offers digital wallets for users to store funds, as well as a variety of other financial products and services based around crypto and blockchain.

Has this affected the Crypto Market?

Despite this crackdown with Binance, it appears that it has had very little effect on the Crypto market, with bitcoin’s value climbing 7% over the weekend to $34,445. Binance Coin, a token issued by the exchange itself, was also up 5.7 per cent. Unlike the volatility seen earlier in the year with the Elon Musk and Tesla tanking bitcoins value, it appears that crypto is remaining resilient.

Analysis of trades on blockchain-based derivatives trading platform CloseCross confirms this and found that UK traders continue to be confident about the price of Bitcoin and Ethereum .

The general distribution of the predictions and the money committed to predictions for the price of Ethereum and Bitcoin on the CloseCross platform shows that almost all traders believe the price of both cryptocurrencies will remain stable or increase in value.

Between 26th June 2021, when the FCA made its announcement, and midday 28th June 2021, around 3 out of 4 of Ethereum and Bitcoin trades on the CloseCross platform are for the cryptocurrency to remain stable or slightly increase in value. Only 25% are predicting a fall in value.

CloseCross CEO, Vaibhav Kadikar, said: “In recent weeks, Bitcoin and Ethereum have seen significant falls in their valuations, however, we could interpret that many traders are predicting that the bulk of this correction is over, and we will start to see prices rises. This is reflected in the fact that prices for many leading cryptocurrencies are rising today.”

This move from the FCA comes at a time where stricter regulation of the cryptocurrency market has been called for, with pushback seen across the globe against crypto platforms. Though as said, it is likely to have little impact on the crypto market, as well as few effects on the companies UK customers, the FCA, alongside other regulators, are clearly sending a strong message that it is aware and concerned of the dangers of investing in cryptocurrencies. 

Mark Hipperson, Founder and CEO of Ziglu said: “Our research shows cryptocurrencies are becoming increasingly mainstream. Given this, it is imperative for the industry to review its marketing activity to ensure that it is not misleading and that it appropriately highlights the potential risks involved in investing in cryptocurrencies.”

Industry Reaction

Crypto remains to be a hot topic, both in the fintech industry and in the wider public. It’s clear it can be a very polarising topic, with many thinking crypto is the next best thing and the solution to a lot of issues with fiat currency and financial fraud, while others are still wary about its drawbacks. Many leaders in the finance world believe the push from the FCA against crypto is positive, with the regulation of crypto being increasingly necessary. 

As part of a membership update shortly after the announcement, Lawrence Wintermeyer, the exec co-chair at Global Digital Finance had this to say.

“We understand that Binance’s decision to withdraw from the FCA AML registration process preceded the Binance Markets Limited (“BML”), a UK entity regulated by the FCA for investment activities. It is important to make this distinction and not conflate these two matters.

“Binance’s decision to stop the use of Faster Payments in the UK appears unrelated to the scope of the FCA ban on BML.

“GDF would conclude that the ban has come following discussions between the FCA and Binance on the manner in which Binance is conducting regulated (investment) activities in BML and this is not a reflection of the FCA’s stance on cryptoassets per se.”

However, Charles Delingpole, founder and CEO of the financial crime risk and detection company ComplyAdvantage, believes that there needs to be more regulatory action.

He said: “The urgency from FCA is driven by the ever-growing size of the issue. As more and more consumer money flows into crypto related assets, the FCA is taking a harder line. “The FCA statement regarding Binance demonstrates that whilst crypto is borderless and global, regulators act vociferously to enforce their local regulation and companies need to be fully compliant with each jurisdiction.The FCA may be the first regulator to act, but they are unlikely to be the last. As different regulators demand that global crypto companies are authorised in each jurisdiction, we can expect each crypto operator to double down on their investment in meeting and surpassing local regulatory requirements. 2021 may become the year that the regulation of crypto truly begins at a global scale.”

Following on the regulation vein, Viktor Prokopenya, a London-based Fintech investor said: “The cat and mouse game between regulators and the FinTech industry respectively is an irrevocable certainty that will perpetuate for the foreseeable future. The underlying parable behind the FCA’s move against Binance is that corporate compliance is a necessity for any business looking to scale: there is a fundamental reliance on fiat currencies which unquestionably comes with regulation, if not immediately then eventually.

“The notion of regulatory water-under-the-bridge is more or less a fallacy, especially when it comes to crypto-exchanges, many of whom presumably breached regulations in the past, for example, by accepting US customers without a license. Such incidents are not wiped from the record just because of compliance with new regulations and are likely to eventually hurt the business. The fintech industry as a whole ought to take away from this that cutting corners, especially those of a legal persuasion, equates to long-run folly.

“The FCA’s blunt decision regarding Binance also highlights an odd, if not ironic, feature of such crypto-exchanges in that the very act of having what is effectively a centralised entity, acting as a make-shift custodian of consumer finances, goes against the very notion underpinning cryptocurrencies which is that of decentralisation. Perhaps, this wake-up call will serve to realign FinTech businesses in the space and act as a catalyst for innovative solutions to meet consumer demand for decentralisation.”

Finally, Nick Jones, CEO of Zumo, the Edinburgh based crypto wallet, also agreed regulation is the next logical step for crypto, and added that UK based platforms need to cater to the needs of UK consumers.

He said: “Crypto firms have come under increasing scrutiny from the FCA following the ban of crypto derivatives in October 2020 and the launch of the FCA’s temporary registration regime pending final ruling on crypto firms’ applications for FCA approval.

“Crypto businesses have to accept that regulation is an important step to the crypto business achieving mainstream adoption. From the UK consumer perspective, we believe that means compliant UK-based solutions that can cater specifically to the needs of UK consumers and offer the level of security and consumer protection they have rightly come to expect.

“Following the FCA’s consumer warning against Binance, it appears that Binance’s UK users are facing problems making pound (GBP) withdrawals. This emphasises the need for consumers to be aware of the dangers of keeping their cryptos with unregulated exchanges, who might have their access to fiat banking services removed. This is why Zumo has ensured appropriate authorisation and licensing; to ensure it has robust access to GBP payments processing. Binance customers who need to sell their cryptos and receive GBP will probably, therefore, need to open an account with a crypto firm that has access to GBP banking services -like Zumo.”

Author

  • Polly is a journalist, content creator and general opinion holder from North Wales. She has written for a number of publications, usually hovering around the topics of fintech, tech, lifestyle and body positivity.

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