Cryptocurrency: Expert discusses success of Bitcoin
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The Financial Conduct Authority (FCA) has targeted the crypto exchange in the latest move meant to safeguard potential investors from the risks associated with virtual currencies. The UK has joined ranks with Canada and Japan, both of which have cracked down on affiliates of the Binance Group. Customers were told on Saturday Binance Markets Limited “is not currently permitted to undertake any regulated activity” without the strict approval of the FCA.
The finance watchdog added: “No other entity in the Binance Group holds any form of UK authorisation, registration or license to conduct regulated activity in the UK.”
The move reaffirms the FCA’s hardline stance on cryptocurrencies, which the regulator has in the past branded “very high risk, speculative investments”.
According to Nick Saponaro, co-founder and CIO at Divi, the ban did not come as a total surprise as “writing has been on the walls for years.”
He said: “This feels like a long time coming. The area that some crypto companies operate in is grey at best.
“These events prove that while blockchain may be decentralised and borderless, the technologies built to support open and public blockchains are not”
Unlike regular fiat currencies, like Pound Sterling, virtual currencies like bitcoin or Dogecoin are deregulated and not centralised around a government-backed institution.
However, Mr Saponaro thinks it was inevitable that regulation would affect crypto in one way or another.
He added: “Regulation was a given, which may come as a disappointment to crypto die-hards but the writing has been on the wall for years.
“Those that work within these boundaries will become the Amazons, Googles, and Facebooks of tomorrow, while the edgier projects may find it increasingly difficult to operate.”
Binance has until Wednesday, June 30, to comply with the FCA’s ruling.
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Can you still use Binance in the UK?
Although the FCA does not regulate the trade of cryptocurrencies, exchanges that list virtual currencies are required to register with the FCA.
Binance drew the FCA’s ire by not registering with the regulator.
According to Alexandra Clark, Sales Trader at the UK based digital asset broker GlobalBlock, the ban effectively prevents Binance from advertising or carrying out regulated activities in the UK.
She said: “This comes after Japan’s Financial Services Agency warned last week that Binance was conducting unauthorised trade in cryptocurrencies with Japanese citizens.”
Binance, however, has informed its clients the FCA ban will not have a “direct impact” on its services.
Binance provides an online crypto exchange through the website Binance.com.
The exchange, which allows customers to buy bitcoin and other tokens, is based in the Cayman Islands.
So in essence, UK customers should still be able to use the Binance.com website to make their cryptocurrencies.
In a series of tweets published on June 27, the company said: “We are aware of recent reports about an FCA UK notice in relation to Binance Markets Limited (BML).
“BML is a separate legal entity and does not offer any products or services via the Binance.com website.
“The Binance Group acquired BML May 2020 and has not yet launched its UK business or used its FCA regulatory permissions.”
The company went on to say it takes a collaborative approach with regulators and takes compliance obligations “very seriously”.
Binance also stressed: “Our relationship with our users has not changed.”
If you have ever considered buying cryptocurrencies, you must remember it is a very risky business.
You are not guaranteed to make a profit, if that is your goal, and you should never invest more money than you are prepared to lose.
The FCA’s official stance on crypto is: “If you invest in cryptoassets, you should be prepared to lose all your money.”
Regulators across the globe have raised concerns about the use of digital currencies in the illicit trade of drugs, money laundering and financing of terrorism.
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