What does the FCA ban actually mean for Binance and its users in the UK?
“Binance banned in City watchdog crackdown”, “Financial watchdog bans crypto exchange from the UK”, “UK financial regulator bans world’s largest crypto exchange”
Headlines such as these have been appearing all over both crypto media outlets and the world’s mainstream press since an announcement was made on Friday by the UK’s top financial watchdog stating “Binance Markets Limited is not permitted to undertake any regulated activity in the UK”.
Reports continued with talk of regulators cracking down on the cryptocurrency industry worldwide, yet many of the relevant details that a reader or investor might need to fully understand the situation if reported at all were hidden in the depths of the articles.
Careless ‘clickbait’ journalism? Or market manipulation? Perhaps a subject for another time, but either way, in today’s high-speed world of news and media consumption, the stories left many Binance users panicked about their own accounts and wallets. Many of them reaching out to us on social media for advice.
So, what does the ban actually mean for the exchange and their users in the UK?
The key lies in the wording, as the ban only applies to Binance Markets Limited, the company’s English incorporation and owner of Binance. The UK. To date, it has not been made clear exactly why, but Binance Markets Limited joined many other UK-based crypto companies in withdrawing their application to register with the FCA on May 17th of this year.
In Friday’s announcement, the FCA stated that Binance Markets Limited must stop advertising to UK customers and collecting their data and must also publish a warning on its website and social media channels by Wednesday.
However, The FCA’s crypto derivative ban which came into effect on 6 January 2021 targets “firms…in, or from, the UK”, specifying any company that operates from a “third country” (a country that is not in the UK) is, explicitly (as per the rules), not affected by the legislation and, regardless, is outside of the FCA’s jurisdiction. In other words, although Binance Markets Limited is banned from offering regulated services in Britain, Binance could still offer Brits crypto trading through its website.
An FCA spokesperson admitted the scope of the ban is limited, “UK consumers can continue to interact” with the Binance Group, including its various international companies, which means that UK customers can continue to trade as normal.
A representative from Binance was also quoted as saying “As of now, Binance group is providing service to the UK customers. It is not from Binance Markets Limited”.
So, it would seem for the time being at least, that nothing has changed.
This article was written by Lee Mockler for The London Crypto Exchange on the 29th of June 2021.