FCA Bans Binance in the United Kingdom as Crackdown Continues

The United Kingdom’s financial watchdog known as the FCA (Financial Conduct Authority) has continued to clamp down on ‘unregulated’ cryptocurrency activities within the country. Its latest episode resulted in the barring of Binance Markets Limited (BML), a subsidiary of Binance Group as published on its website. The FCA stated that it does not authorize the body to carry out regulated activity within the country. An excerpt from the website reads:

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

Reaction to FCA Decision

The FCA decision shocked many UK residents and cryptocurrency enthusiasts, as they initially perceived it to be an outright ban on Binance which will cause the leading exchange to cease operations in the UK. Further clarity showed that contrary to popular thoughts, the ban will apparently change nothing.

Binance Reacts

Responding swiftly to the reports, Binance clarified that Binance Group acquired Binance Markets Limited in May last year, and that the latter is an independent entity whose services differ from those rendered by its parent body. It also outlined that the BML is yet to commence operations and as such, is yet to use FCA regulatory permissions. This implied that residents of the UK can continue to use Binance to trade cryptocurrencies.

“BML is a separate legal entity and does not offer any products or services via the Binance[dot]com website. The FCA UK notice has no direct impact on the services provided on Binance[dot]com. Our relationship with our users has not changed” – @Binance via Twitter

How This Could Shape Up in the Future

Speculations surfaced that Binance’s new subsidiary intended to introduce derivatives trading to the UK, hence the FCA ban. The latter has sternly frowned at derivative trading in the past, having issued a cease and desist order to derivative trading platforms earlier this year. The financial watchdog started considering a ban on the sale of derivative products to retail traders in 2019.

Cryptocurrency derivatives allow traders to profit off speculations by entering contracts where they agree to buy cryptocurrencies at a particular price on a later date. FCA believes that there’s still a lot of uncertainty regarding the future of cryptocurrencies and retail investors should not be exposed to derivatives.

Risks of Derivatives

This is not an unfounded stance as over 75% of all retail customers will lose money on derivatives.

The FCA also claimed that investors in the country lost about $492 million on derivative trading between mid-2017 and late 2018. It concluded that a ban on derivative trading will help retail traders save more than $60 million each year. Currently all regulated stock CFD platforms operated and regulated in the UK must carry a declaration that most retail investors will lose money.

The body issued a press release on January 6, 2021, communicating a ban on the sale of derivative crypto products to retail investors in the United Kingdom. FCA’s Executive Director of Strategy Competition, Sheldon Mills said:

‘This ban reflects how seriously we view the potential harm to retail consumers in these products. Consumer protection is paramount here. Significant price volatility, combined with the inherent difficulties of valuing crypto assets reliably, places retail consumers at a high risk of suffering losses from trading crypto-derivatives.’

Despite the recent events, Binance is still nursing plans to launch Binance.uk, a subsidiary platform for residents in the region.

Leave a Reply

Your email address will not be published.

Related Articles
Read More

Justin Sun Rejects Defamatory Accusations

Tron Founder Accused of Several Illegal OperationsAn article by The Verge, published on Wednesday (March 9, 2022), written by Christopher Harland-Dunaway, alleged that Sun was possibly involved in a litany of illegal activities. The reporter stated that he received information about the crypto entrepreneur's operations...
Read More

How Blockchain Is Helping To Manage The COVID-19 Pandemic.

Even though the pandemic has had many adverse effects, it has been a positive tech-opener. Many people are now inclined to technology to solve the issues brought about by the pandemic. Blockchain is one of the leading technologies that is managing the pandemic. Blockchain technology...
Read More

WAX Unleashes Blockchain Brawlers, A Great New NFT Collection

As we enter the final weeks of this year, NFT projects are still launching, while existing ones are coming up with new collections for their communities to buy, sell, trade, and enjoy. One example is WAX, which only recently announced a new NFT collection called...
Read More

HIVE To Purchase Intel's Mining Chip To Scale Up Hashrate

HIVE Looking to Nearly Double Aggregate Bitcoin Mining HashrateHive announced the news of the deal in a press release on Monday (March 7, 2022). According to the announcement, the company also struck a manufacturing agreement with an ODM (original design manufacturer) to incorporate Intel's chips...
Total
0
Share