Binance, the indomitable! The Financial Conduct Authority (FCA), the UK’s financial watchdog, has admitted in a June 2021 supervisory note that it was unable to supervise Binance. The leading Bitcoin exchange platform, which is currently undergoing a number of regulatory operations, is said to be uncooperative in terms of information sharing.
FCA: between restrictions and admission of impotence
The Financial Conduct Authority has imposed restrictions on Binance in its June 25, 2021 supervisory notice. The latter asks the exchange to cease providing regulated services to clients in the United Kingdom, and to clearly display this prohibition on www.binance.com. It also requires Binance to cease advertising and promotions in the UK. However, the FCA also acknowledges its inability to effectively supervise the exchange:
“On the basis of the firm’s commitment to date, the FCA considers that the firm is not in a position to be effectively supervised. This is particularly concerning in the context of the firm being part of a global group that offers complex and high-risk financial products, which poses a significant risk to consumers.”
Compliance but barriers remain
The note referred to Binance’s uncooperative attitude in providing information deemed insufficient in the past, which in some cases amounts to “a refusal to provide information” according to the FCA. For example, Binance has not provided convincing answers about the business names and functions of all of the group’s entities around the world, as well as the entities with which UK retail and professional customers interact to trade on binance.com.
The exchange also failed to clarify the issue of stock tokens, which like traditional shares, allow you to buy a share in companies like Tesla and Coinbase. These stock tokens have not been available for purchase on the exchange since mid-July 2021, just 3 months after their launch in April 2021. They continue to be supported by the exchange until 14 October 2021.
These restrictions imposed by the FCA on Binance Markets Limited remain in place although the Financial Regulator has stated in an update to its supervisory note dated 25 August 2021, that “the firm has complied with all aspects of these requirements”, but that “these requirements remain in place and BML does notBinance is still not able to conduct regulated activities in the UK.
Binance is not only facing pressure from the FCA, even though it reportedly has no concrete means of action to crack down on the exchange, but also from regulators in several other countries such as Germany and the Netherlands who have just fired a shot across the bow at the exchange and its customers.