Banning of Binance in UK
WHAT IS BINANCE?
Binance is a cryptocurrency exchange platform founded in 2017 by Changpeng Zhao with a strong emphasis on altcoin trading. Binance swiftly established itself as one of the most famous cryptocurrency exchanges, offering over 500 cryptocurrencies and virtual tokens for trading, including bitcoin (BTC), ethereum (ETH), litecoin (LTC), dogecoin (DOGE), and it’s own Binance Coin (BNB).
The Binance exchange has grown in popularity due to its low transaction fees, high liquidity, and discounts for users who pay in the native BNB cryptocurrency tokens. It is best known for crypto-to-crypto trading—trading between two cryptocurrency pairs rather than national currencies like dollars or yen.
In a market that has witnessed so many failures, such as exchanges being hacked and companies growing rapidly only to lay off large numbers of staff, a successful crypto business exchange is something of a unicorn. In just two years, Binance has risen from nowhere to become the largest cryptocurrency exchange in terms of trading volume, with daily trades reaching over $2 billion.
Binance is regulated by the US government and is available in all but these seven states: Connecticut, Hawaii, Idaho, Louisiana, New York, Texas and Vermont. It is also available in all but 15 countries e.g. Iran, Belarus, Serbia, Bosnia, Myanmar etc. The fundamental difference between it and other exchanges is actually quite simple. It values its users and prioritizes them above all else, no matter what.
The Chinese authorities, for example, opted to shut down all exchanges shortly after Binance started. They altered the rules and requested that all Initial Coin Offering (ICO) exchanges refund investors’ money. Zhao went above and beyond the government’s request by reimbursing all Binance users for their initial investments at the original investment rate.
This dedication to safeguarding customers’ funds helped Binance establish a devoted following among crypto enthusiasts, regardless of whether they were directly affected by the shift in Chinese rules.
INVESTIGATIONS ON BINANCE
Despite the seeming good Binance exchange has, on March 12, 2021, according to Bloomberg, it was investigated by, The Commodity Futures Trading Commission (CFTC) to know if permitted Americans to place wagers that were illegal in the United States.
The CFTC investigated whether Binance, which isn’t registered with the agency, allowed U.S. residents to purchase and trade derivatives regulated by the agency, according to the people, who asked not to be identified because the investigation is ongoing. Binance, which has a Singapore office, but claims to have no single corporate headquarters, has not been charged with any wrongdoing, and the probe may not result in any enforcement action.
Changpeng Zhao, a co-founder of Binance, defended the company, claiming that it adheres to American regulations and has strict safeguards in place to prevent consumers from laundering money. He declined to comment on whether the CFTC is examining Binance during an event on the social networking platform Clubhouse.
On 28th, June 2021, In the latest regulatory crackdown on the massively popular trade in bitcoin and other digital assets, authorities in the United Kingdom and Japan targeted affiliates of Binance Holdings Ltd., the world’s largest cryptocurrency exchange network.
On Saturday, the UK’s leading financial regulator, the Financial Conduct Authority, informed consumers that Binance’s local branch was not permitted to conduct operations connected to regulated financial activities.
The Financial Conduct Authority (FCA) stated that Binance Markets Ltd, Binance’s only regulated UK business, “shall not carry out any regulated activity without the FCA’s prior written authorisation… as soon as possible.”
Crypto-related businesses have had to register with the FCA and comply with anti-money laundering requirements since the beginning of this year. The majority of businesses have been granted “temporary registration” until July.
Even though this is one of the most basic building blocks of financial services regulation, the watchdog reported earlier this month that only five firms had registered, and the bulk was not yet compliant.
Due to the implementation of conditions by the FCA, Binance Markets Limited is presently not permitted to engage in any regulated activity without the FCA’s prior written consent, the notice adds. No other entity in the Binance Group is authorized, registered, or licensed to conduct a regulated activity in the United Kingdom. The Binance Group appears to be offering a variety of products and services to UK customers through a website called Binance.com.
The exchange was given until June 30 to confirm that it is following the FCA’s instructions. It must also safeguard and retain all records relevant to UK consumers by July 2 and notify the FCA of this.
Despite the FCA’s prohibition on Binance delivering services in the UK, Europeans can still use Binance’s services in other jurisdictions to speculate on the price of bitcoin rising or falling.
According to a tweet put out on Sunday, Binance Markets Limited (BML) is a distinct legal entity that does not provide any products or services through the Binance.com website. It said that the FCA UK warning has no direct impact on the crypto website’s services and that its relationship with users has not altered.
“When it comes to engaging with regulators, we take a collaborative approach and take our compliance commitments extremely seriously. The tweet reads, “We are actively keeping ahead of changing regulations, procedures, and legislation in this new arena.” – Binance
At first look, the Financial Conduct Authority’s decision to ban Binance from operating in the United Kingdom appears to have had no impact. After all, the company’s numerous UK clients will be able to purchase and sell Bitcoin and other cryptocurrencies through its Cayman Islands-based exchange.
Nonetheless, the FCA is sending a strong message that it is concerned about the risks of cryptocurrency investing in general. It wants them all to register because it is concerned that they could be used as a cover for illegal activity, and it wants consumers to be extremely cautious.
In addition to prohibiting Binance from opening an exchange in the UK, the regulator has ordered its UK division to cease all advertising by June 30. More importantly, it has until the end of this week to prove to the FCA that it has all of its UK clients’ records preserved and ready to be turned over if necessary.
Consumers in the United Kingdom should check whether any cryptocurrency company is registered with the authority and, if it isn’t, consider withdrawing their funds. The FCA may not be able to prevent anyone from trading cryptocurrencies, but it has raised its biggest red flag and is waving it vehemently.
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