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05 July 2021

Binance Reprimanded by FCA

As part of their colourful yet fairly brief history, cryptocurrencies have experienced a tumultuous 12 months. The value of Bitcoin, one of the world’s most well-known cryptocurrencies, reached an all-time high of US$63,729.50 (£46,191.46) in April 2021, one day after crypto exchange Coinbase listed on the Nasdaq.

Trading platforms like Coinbase have grown in popularity in recent years, helping a host of cryptocurrencies rise in value by offering easy-to-use buying and selling services. However, cryptocurrencies have their controversies and now, fellow trading platform Binance has been banned in the UK by the Financial Conduct Authority (FCA).

Under the ruling, the FCA has stated that the platform cannot conduct any “regulated activity” in the country, while it also issued a consumer warning about its website Binance.com, advising users to be wary of adverts promising high returns on cryptoasset investments.

Despite the FCA’s decision, Binance said the notice would have “no direct impact” on the services it provides in the UK from its website. As Binance’s crypto exchange is not based in the UK, unlike its London-based affiliate Binance Market Limited, there will be no impact on UK residents who use the platform to purchase and sell cryptocurrencies.

In a statement on its website, the FCA said: “Most firms advertising and selling investments in cryptoassets are not authorised by the FCA. This means that if you invest in certain cryptoassets you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong.

“While we don’t regulate cryptoassets like Bitcoin or Ether (Ethereum), we do regulate certain cryptoasset derivatives (such as futures contracts, contracts for difference and options), as well as those cryptoassets we would consider ‘securities’, the statement continued. “A firm must be authorised by us to advertise or sell these products in the UK.”

In response, Binance said it was “aware of recent reports about an FCA UK notice in relation to Binance Markets Limited (BML). BML is a separate legal entity and does not offer any products or services via the http://Binance.com website.”

The firm added: “The FCA UK notice has no direct impact on the services provided on http://Binance.com. Our relationship with our users has not changed. We take a collaborative approach in working with regulators and we take our compliance obligations very seriously. We are actively keeping abreast of changing policies, rules and laws in this new space.”

Regulators around the world recently initiated a widespread crackdown on cryptocurrency platforms. The price of a host of cryptocurrencies fell dramatically in June following reports of heightened regulations in China. On 22nd June, Bitcoin’s price fell to its lowest level (US$29,337.82) in since New Year’s Day as part of the fallout.

Binance specifically has been warned by several global financial authorities in recent times. In the US, the firm has been the subject of a probe by the US Securities and Exchange Commission (SEC), while last week, Japan’s Financial Services Agency (FSA) warned the company for the second time in three years that it is operating in the country without permission.

Please note that investments and income arising from them can fall as well as rise in value. This communication is for information only and does not constitute a recommendation to buy or sell the shares of the investments mentioned.
Binance Reprimanded by FCA
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