Binance’s effort to comply with regulations keeps hitting roadblocks. No matter how much the global exchange does, there always seems like there is more to do!
The exchange announced a temporary halt on new UK customer registrations in response to the recent amendments from the Financial Conduct Authority (FCA). According to the exchange’s latest updates, Binance will stop onboarding new UK users, starting from Monday 16 October 2023.
The new rules will also place restrictions on the exchange’s existing customers in the UK. Binance noted that available services remain accessible to existing UK users, but “any new products and services will not be made available during this interim period.”
More Heat From Legacy Regulators
On Oct. 8, Binance launched a UK-specific domain in partnership with REBS, an FCA-approved firm, to provide financial promotions in compliance with FCA’s regulations. This was the exchange’s attempt to re-enter the UK markt after its withdrawal of UK operations license in July.
Later on Oct. 10, the UK financial authorities updated its Financial Promotions Regime with legally binding requirements on Rebuildingsociety.com Ltd (REBS), Binance’s promotion partner in the UK.
The new rules impose restrictions on financial promotion service of REBS on behalf of any crypto-related entities. REBS’ previous statement regarding the partnership with Binance was already removed from its website.
As reported, Binance is looking to find a new FCA-authorized partner for financial promotions. The exchange affirmed that it was working closely with the regulatory body to ensure that the recent changes in service offerings would not affect their customers.
Financial promotions of high-risk investments like crypto assets are the FCA’s key focus. The agency officially prohibited crypto firms from providing misleading statements to advertise crypto assets. Companies are required to issue clear notice regarding the risks of investing in crypto.
Binance is undoubtedly one of the world’s most popular crypto exchanges. But widespread reputation comes at a price. The leading exchange has been increasingly under the radar of global regulators since the beginning of 2023.
Binance and its founder, Changpeng Zhao, are currently facing a legal lawsuit launched by the U.S. Securities and Exchange Commission (SEC). The agency alleged Binance of violating securities laws, misusing customers’ funds, and market manipulation.
The exchange is alternatively under scrutiny of the Commodity Futures Trading Commission (CFTC).
Other major jurisdictions are also challenging. The UK FCA and Japan’s financial regulators previously warned that Binance’s operations were’t approved in these regions.
Apart from Binance, the FCA reported over 140 non-authorized crypto-asset firms, including HBT (formerly Huobi) and KuCoin. Up to date, there have been only 42 entities approved by the FCA, including Bitstamp, Revolut, and Gemini.
Crypto Companies Aren’t Ready for MiCA
Since a series of collapses in the crypto sector last year, the global policymakers have ramped up efforts to establish regulations on cryptocurrency. This explains the increased number of legal frameworks formulated across different countries over the course of 2023. However, it takes time for rules to take shape.
Introduced in 2020, the UK Markets in Crypto-Assets Regulation (MiCA) is among the most anticipated legal frameworks.
MiCA regulations aim to create a harmonized regulatory framework for crypto-assets across the member states and to provide greater protection for investors without stiffing innovations.
The laws are set to hit markets in December 2024, however, most crypto companies aren’t ready for the implementation. According to Independent’s new report, crypto firms are seeking to extend “grace period” to ensure regulatory compliance.
Major fintech players, such as PayPal and Revolut, reportedly wrote to the Department of Finance in request for a transitional period before the full implementation. Representatives of these firms expect an additional five-year extension, citing the complexity and costs associated with the implementation as reasons for the request.
