One of the world’s leading financial regulators said that although the cryptocurrency exchange’s product poses “significant risk,” it “lacks the ability” to properly regulate Binance, which allows consumers to gamble too much.
Binance is one of the largest cryptocurrency exchanges in the world, facilitating hundreds of billions of dollars in transactions every month.
But the Financial Conduct Authority said Binance’s UK branch “failed” to answer some of its basic questions and therefore could not supervise this huge group, which has no fixed office and provides services around the world. .
This recognition underscores the scale of the challenge that authorities face in addressing the potential risks of consumers purchasing often unregulated products through flexible cryptocurrency businesses that can often circumvent state bans by allowing users to visit facilities overseas.
Two months ago, the FCA condemned Binance, saying the company has no right to provide traditional financial services or cryptocurrency exchanges in the UK. Regulators from other major financial centers have also expressed concern about Binance, but the company continues to provide crypto transactions to consumers around the world.
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UK regulators said on Wednesday that Binance’s “complex and high-risk financial products” “posed significant risks to consumers.”
He added that one of Binance’s London-based subsidiaries, which has been registered as an investment firm with the regulator, did not provide enough information on the group’s broader product offerings and other business details in the UK. He said this means that Binance, incorporated in the Cayman Islands, “cannot be effectively supervised”.
Binance said it will continue to “work with the FCA to resolve any outstanding issues that may exist.” He added that it has complied with a number of requirements set by the FCA in June, including posting notices on its website.
FCA has launched a series of warning Opposite cryptocurrency exchanges by regulators around the world. However, UK consumers can still trade derivatives and other regulated products on Binance.com. The exchange has no official headquarters and uses affiliates in different jurisdictions to access the traditional financial banking system.
Its CEO, Changpeng Zhao, vowed to strengthen compliance, as financial regulators questioned the rigor of its policies to prevent money laundering and terrorist financing on the platform.
According to former employees, Binance has set up an independent, gated UK exchange through an FCA regulatory agency called Binance Markets Limited, which will provide cryptocurrency trading against the British pound and the euro. He applied to become a registered UK cryptocurrency company, but withdrew his application in May.
FCA said it disagreed with Binance’s answer to his questions this year. “FCA believes that the company’s response to certain questions amounts to a refusal to provide information and that the company has not responded adequately to FCA’s request for information,” he said.
He further stated that Binance has even refused to provide basic information, such as “the trade names and functions of all group entities around the world”.
The exchange has indicated to FCA that its UK operations are separate from the rest of the global group. However, internal Binance documents viewed by the Financial Times stated that “Binance operates an FCA regulated business” and stressed that “consumers will be subject to FCA regulatory guidelines.”
Binance said: “The information provided to the FCA is correct and we will continue to have frank discussions with UK regulators.”
The FCA notice further stated that Binance’s UK branch does not have any approved senior managers, although it has submitted applications for the positions of executive director, compliance supervisor and anti-money laundering officer.
The group said earlier this month that it had hired former IRS agent Greg Monaghan as its global money laundering whistleblower. He also recently hired former eToro executive Jonathan Farnell (Jonathan Farnell) as director of compliance.
Zhao said last month that Binance “is hiring a great team with a strong compliance background.”