The UK’s financial watchdog has ordered Binance to stop all regulated activities in Britain and imposed strict requirements in a stinging rebuke to one of the world’s largest cryptocurrency exchanges.
The intervention of the Financial Conduct Authority in recent days is one of the most significant steps any global regulator has taken against Binance, a sprawling digital asset company with branches around the world. The exchange has until Wednesday evening to confirm its compliance with the agency’s demands, and to remove its ads.
The intervention is a sign of how regulators are cracking down on the cryptocurrency industry due to concerns about its potential role in illicit activities such as money laundering and fraud, and oftentimes weak consumer protections.
The FCA also issued a warning to consumers this weekend against both Cayman Islands-registered Binance Holdings Inc. and Binance Markets Limited, a London-based subsidiary controlled by CEO Changpeng Zhao and overseen by the British regulator.
“Binance Markets Limited is not permitted to conduct any regulated activity in the UK,” the FCA said, adding that “no other entity within the Binance Group holds any form of UK authorization, registration or license to conduct regulated activity in the UK.”
The group did not immediately respond to a Financial Times request for comment, but previously said it “takes compliance obligations seriously and is committed to following local regulator requirements wherever we operate.”
Binance Markets Limited is not accredited under the FCA’s crypto registration system, which is required for UK groups that provide digital asset services.
The entity applied to become a cryptocurrency company registered with the regulator, but pulled the application last month “following extensive involvement from the FCA,” according to a spokesperson for the watchdog and two people familiar with the situation.
The focus of the FCA in deciding whether or not to approve these requests is based on a review of controls and practices to prevent anti-money laundering and terrorist financing.
Binance is one of the most important players in the fast-growing crypto market, offering a range wide range of services to clients around the world, including trading in dozens of digital currencies, futures, options and stock tokens, as well as savings and lending accounts. Crypto trading volumes hit $1.5 trillion last month, according to data from TheBlockCrypto.
As part of the FCA’s actions, the regulator has ordered Binance to display by next Wednesday on its website, “BINANCE MARKETS LIMITED is not allowed to conduct any regulated activity in the UK.” Binance Markets Limited must also “secure and retain all records and/or information . . . relating to all UK consumers from its systems” and stop any promotional and financial advertising.
Binance Markets Limited was set up a year ago as part of the group’s broader plan to launch a UK-focused exchange, Binance UK, which would have been “trapped” from the broader global operation, according to public documents and two people familiar with the matter. Although the FCA has banned Binance from offering services in the UK, British citizens can still access Binance services in other jurisdictions.
London-based Binance Markets Limited has received permission from the FCA to provide consumers with fiat currency investment services, something Binance achieved by purchasing a financial firm already registered with the regulator. The deal was approved by the FCA last June, according to public documents.
The FCA’s decision comes after Japan’s Financial Services Agency warned last week that Binance was conducting unauthorized trading in cryptocurrencies with Japanese nationals. This is the second time the Financial Services Authority has warned Binance after publishing a similar notice in 2018.
The German Financial Supervisory Authority warned investors in April That Binance may have violated securities rules over its launch to trade in securities tokens, something the exchange has tried unsuccessfully to do Appeal against.
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Additional reporting by Robin Harding in Tokyo