UK bans Binance crypto exchange as global scrutiny intensifies

Regulators warn that Binance, the cryptocurrency exchange founded by Chinese-Canadian Changpeng Zhao, is not permitted to operate in the UK

(AF) The UK’s Financial Conduct Authority (FCA) has issued a warning that Binance is not regulated to operate in the country, in the latest crackdown on the cryptocurrency exchange that accounts for a large share of global bitcoin trading.

US regulators are reportedly investigating Binance to see whether American residents are conducting trades on the exchange, while Japanese and German authorities have also warned recently that their citizens are conducting unauthorised trades.

Changpeng Zhao, the Binance founder who is widely known as CZ, was born in China but grew up in Canada.

Binance is already banned in China and has in recent years had its main base in Singapore. It has taken some steps to address a reputation for attempting to evade national regulation, including establishment of a subsidiary in London called Binance Markets Ltd, but the UK regulator has now specifically targeted this unit.

“Binance Markets Limited is not permitted to undertake any regulated activity in the UK. This firm is part of a wider group (Binance Group),” the FCA said in a statement.

“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. No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK. The Binance Group appear to be offering UK customers a range of products and services via a website, Binance.com,” the regulator added.

The FCA also warned against about the broader risks of investing in cryptocurrencies.

“Be wary of adverts online and on social media promising high returns on investments in cryptoasset or crypto-asset-related products. Most firms advertising and selling investments in cryptoassets are not authorised by the FCA,” it said.

“While we don’t regulate crypto-assets like Bitcoin or Ether, we do regulate certain crypto-asset derivatives (such as futures contracts, contracts for difference and options), as well as those crypto-assets we would consider ‘securities’. A firm must be authorised by us to advertise or sell these products in the UK… Always be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true,” the regulator warned.

The latest regulatory attempt to control crypto use had little immediate effect on the price of Bitcoin, which rose to over $33,000 on Sunday June 27.

The statement did not prompt any public reaction from Binance either, with no sign on its website of a disclaimer that the FCA has ordered to be posted explaining that the exchange is not regulated in UK.

The FCA said that Binance must by June 30 post a notice reading: “BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE UK. 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. (No other entity in the Binance Group holds any form of UK authorisation, registration or license to conduct regulated activity in the UK).”

Binance founder Changpeng Zhao’s twitter feed also failed to acknowledge the ban, with his latest tweets stressing that the exchange had recently passed a milestone of 700 million smart chain-contracts, and promoting the recent dip in the price of bitcoin as an opportunity to buy.