On Wednesday, the UK’s securities regulator, the FCA, said it is unable to oversee Binance, the world’s largest crypto exchange.
This happened after Binance failed to answer the regulator’s crucial questions about its lack of protection for crypto investors.
With Binance no longer being overseen by the FCA, it means crypto investors are now at risk – after all, they are investing in complex and risky financial products.
According to the FCA, it is impossible to effectively supervise Binance. This poses a “significant risk” to consumers of their products, which they are offered outside of the regulatory framework.
Crypto market without FCA oversight
The FCA’s declaration of no oversight for Binance comes at a time when Bitcoin prices are experiencing an upswing – from a low of $30,000 in July to $50,000 in August.
Bitcoin’s upswing is sure to attract many small savers – not to mention UK investors. But with the FCA out of the picture, they’ll have to navigate the volatile market on their own.
In June, the FCA banned the sale of crypto derivatives to retail investors. But that move hasn’t stopped trading, which is still thriving on UK crypto exchanges.
The FCA’s ban, while still effective, cannot affect investors’ access to derivatives outside the UK – unless there is suspicion that retail investors are funding terrorism or money laundering activities overseas.
Investors can still trade on Binance
The UK arm of cryptocurrency exchange Binance assured investors it will continue to work with the FCA to resolve any issues in the UK.
The company also claims to be “fully compliant with all aspects of the regulator’s requirements.” But that has yet to be confirmed.
In June this year, Binance was asked by the FCA to cease regulated financial activities and post a notice to that effect on its website. That has yet to happen.
The FCA’s latest concerns about Binance are unlikely to affect investors, who are likely to continue trading on Binance – even if the exchange is not regulated by the FCA.
If the financial deals fail, investors will. warned that they will have no recourse to the regulator.
In June, deposits and withdrawals to Binance in sterling were halted. However, this measure did not stop investors from trading on Binance. They continued to withdraw money and transferred their cryptocurrencies to other crypto exchanges .
Binance is structured in such a way that national regulators cannot take action against it because it has no central headquarters. So there is nothing to stop people from trading.