The Financial Conduct Authority (FCA) has made an update to their consumer warning made against Binance on June 26. The update stated that Binance Markets Limited, a U.K.-based subsidiary of the global cryptocurrency exchange had “complied with all aspects of the requirements” previously placed on it.
In a supervisory note dated June 25 but just made public as part of the update, the FCA stated that Binance Markets Limited was not capable of being effectively supervised by the FCA. Hence, the regulator considered it to be a serious concern.
The initial FCA warning told consumers that Binance was operating without any form of authorization, registration, or license to conduct regulated activities in the U.K.
Binance and its subsidiary were asked to fulfill requirements that included ending any offers that were deemed to be regulated by the FCA; displaying on their website as well as every other of their communication channel that the exchange is not permitted to undertake any regulated activity in the country and remove all forms of advertising. Added to these, Binance was also to report on their compliance and preserve all records of their UK-based users.
The update confirms that the regulatory watchdog has not lifted the restrictions it placed on Binance from offering what it considers to be regulated activities.
The FCA’s action against Binance at the time was one in a series of complaints filed against the exchange in the period. Within the same period, regulators in the U.S., Germany, Japan, and Malaysia to name a few also issued similar warnings against the exchange, with some even opening investigations in their operations.
However, since then Binance has been taking steps to align itself with regulators globally. The compliance with the FCA directive that has essentially curtailed a lot of its activity is an indication of this. CEO of Binance, Changpeng Zhao also CZ, seems to also feel that way. CZ in a tweet directly quoted the FCA update.
“25 August 2021 update. On 25 June 2021, the FCA imposed requirements on Binance Markets Limited. The firm complied with all aspects of the requirements”
In a more recent tweet, he recapitulated that the exchange was working to prove its doubters wrong by its actions.
Binance has repeatedly restated its commitment to its customers and has been reorienting its operations to make it more compliant with regulations. The exchange has wound down some of its services such as derivatives and stock tokens in several countries including Germany, the Netherlands, and Brazil following the complaints by regulators. Binance has also lowered the maximum leverage trading it offers to 20x to help traders make less risky bets.
All of this has also been followed by the exchange tightening up its know your customer (KYC) requirements for its users and making strategic hires to beef up its team to be able to relate properly with regulators. One of such hires is its recent appointment of Richard Teng, the former CEO of Abu Dhabi’s financial watchdog Abu Dhabi Global Market, to head the exchange’s operations in Singapore.