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The UK’s financial watchdog has ordered Binance to stop all regulated activities in Britain and has imposed strict requirements on a harsh disapproval of one of the world’s largest cryptocurrency exchanges.
The intervention of the financial conduct authority in recent days is one of the most significant moves made by any global regulator against Binance, an extensive digital resource company with subsidiaries around the world. The exchange has until Wednesday evening to confirm that it has met the requirements of the watchdog.
The intervention is a sign of how regulators are cracking down on the cryptocurrency industry because of concerns about its potential role in illicit activities such as money laundering and fraud, and poor consumer protection.
This weekend, the FCA also issued a consumer warning against Binance, a Cayman Islands-registered company, and Binance Markets Limited, a London-based subsidiary controlled by chief executive Changpeng Zhao and overseen by British regulator.
“Binance Markets Limited is not permitted to conduct any regulated activity in the United Kingdom,” the FCA said, adding that “no other entity of the Binance Group has any form of authorization, registration or license from the United Kingdom to carry out regulated activities in the United Kingdom “.
The group did not immediately respond to a request for FT comments, but previously said it “takes its compliance obligations very seriously and is committed to following the requirements of local regulators wherever we operate.”
Binance Markets Limited is not approved under the FCA’s cryptocurrency registration regime, which is mandatory for UK groups offering digital asset services.
The entity had applied to become a registered cryptocurrency company with the regulator, but withdrew the application last month according to two people familiar with the situation. The vigilante confirmed that the application had been withdrawn “following an intense FCA commitment”.
The FCA’s approach to deciding whether or not to approve these applications is based on a review of controls and practices to prevent money laundering and terrorist financing.
Binance is one of the leading operators in the fast emerging crypto market, offering a broad range of services to customers around the world, including trading dozens of digital currencies, futures, options, securities, as well as savings accounts and loans. According to data from TheBlockCrypto, it recorded crypto trading volumes equivalent to $ 1.5 million last month.
As part of the FCA’s actions, the regulator ordered Binance to show next Wednesday on its website that: “BINANCE MARKETS LIMITED IS NOT PERMITTED TO UNDERTAKE ANY REGULATED ACTIVITY IN THE REIGN.” Binance Markets Limited must also “protect and preserve all records and / or information … related to all UK consumers from its systems” and stop any advertising and financial promotion.
Binance Markets Limited was established a year ago as part of a larger group plan to launch a UK-centric exchange, Binance UK, which would have been “closed” from the wider global operation, according to the public documents and both people. familiar with the matter. Although the FCA has restricted Binance from offering services in the UK, British citizens can still access Binance’s services in other jurisdictions.
London-based Binance Markets Limited had permission from the FCA to provide consumers with investment services in traditional currencies, which Binance achieved by buying a financial company that was already registered with the regulator. According to public documents, the transaction was approved by the FCA last June.
The FCA’s decision comes after the Japan Financial Services Agency warned last week that Binance was conducting unauthorized cryptocurrency trades with Japanese citizens. This is the second time the FSA has warned about Binance after posting an identical warning in 2018.
The German financial watchdog warned investors in April that Binance had probably violated the securities rules at the launch of the securities trading, which the exchange tried unsuccessfully appeal against.
Journalists for this story can be contacted by email at adam.samson@ft.com philip.stafford@ft.com or Telegram at @adamsamsonFT @staffordphilip
Additional reports by Robin Harding in Tokyo
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