Binance’s UK Comeback Stalled by Regulatory Compliance Woes
Highlights
- Binance is encountering obstacles in its bid to re-enter the UK market, struggling to find a new UK partner compliant with Financial Conduct Authority regulations.
- The FCA restricted the company's previous UK partner, Rebuildingsociety.com, from promoting Binance's services due to compliance issues.
- Binance voluntarily withdrew its FCA registration in May 2023, signifying its retreat from services it had not offered in the UK.
Binance, the global cryptocurrency exchange, is facing significant challenges in its attempt to re-enter the UK market. According to a recent Bloomberg report, the exchange has been unsuccessful in securing a new UK partner authorized to approve financial promotions as mandated by the Financial Conduct Authority (FCA). The requirement for an authorized approver is critical for Binance to comply with FCA regulations and resume operations in the UK.
The report reveals that Binance’s efforts to find a new partner have been met with reluctance from at least three firms with the necessary regulatory permission. This development follows the FCA’s decision to restrict Binance’s previous partner, Rebuildingsociety.com (REBS), from promoting its goods and services. This action by the FCA, citing compliance issues, forced Binance to cease new user onboarding and search for an alternative compliant partner.
Binance’s Regulatory Challenges and Official Statements
The difficulties Binance is facing in the UK are part of a broader pattern of regulatory challenges. In June 2023, the United States Securities and Exchange Commission filed a lawsuit against the exchange and its former CEO, Changpeng Zhao. The lawsuit alleged that Binance offered unregistered securities in the US and engaged in wash trading, among other accusations. Zhao later pleaded guilty to violating US Anti-Money Laundering requirements, agreeing to step down as CEO in a settlement with the US Department of Justice.
Despite these challenges, the exchange maintains a positive outlook. In a statement to Bloomberg, the exchange refuted claims of being rebuffed by potential UK partners. Binance emphasized ongoing productive conversations with potential approvers and expressed confidence in providing a positive update soon. The exchange officially canceled its registration with the FCA through Binance Markets Limited in May 2023, following a decision to withdraw from regulatory permissions for activities not offered in the UK.
Global Scrutiny Intensifies on Cryptocurrency Exchanges
Binance’s struggle to re-establish its presence in the UK indicates the increasing regulatory scrutiny facing global cryptocurrency exchanges. The FCA’s concerns about new businesses partnering with Binance reflect a growing caution among financial institutions regarding compliance with stringent regulatory standards. This illustrates cryptocurrency exchanges’ challenges in balancing innovation and compliance in diverse regulatory environments.
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