U.K. FCA says it is “incapable” to supervise cryptocurrency exchange Binance

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Binance Update

One of the world’s leading financial regulators stated that although the cryptocurrency exchange’s product poses “significant risks”, it “does not have the ability” to properly regulate Binance, which allows consumers to make over-betting.

Binance is one of the world’s largest cryptocurrency exchanges, facilitating hundreds of billions of dollars in transactions every month.

However, the Financial Conduct Authority stated that Binance’s UK branch “failed” to respond to some of its basic questions and therefore could not supervise this huge group, which does not have a fixed headquarters and provides services around the world.

This recognition underscores the scale of the challenge that the authorities face in dealing with the potential risks of consumers buying often unregulated products through flexible cryptocurrency businesses that can often circumvent state bans by allowing users to visit overseas facilities.

Two months ago, the FCA condemned Binance, saying that the company has no right to provide traditional financial services or provide cryptocurrency exchanges in the UK. Regulators in other major financial centers also expressed concern about Binance, but the company continues to provide crypto transactions to consumers around the world.

British regulators said on Wednesday that Binance’s “complex and high-risk financial products” “posed significant risks to consumers.”

It added that one of Binance’s London-based subsidiaries, which was registered as an investment company with the regulator, did not provide enough information about the broader product offerings and other business details of the group in the UK. It stated that this means that Binance, incorporated in the Cayman Islands, “cannot be effectively supervised.”

Binance stated that it will continue to “work with the FCA to resolve any outstanding issues that may exist.” It added that it has complied with a series of requirements set by the FCA in June, including posting notices on its website.

FCA launched a series of warn It is opposed to cryptocurrency exchanges by regulators around the world. However, British consumers can still trade derivatives and other regulated products on Binance.com. The exchange does not have an official headquarters and uses affiliates in different jurisdictions to access the traditional financial banking system.

Its CEO, Changpeng Zhao, vowed to strengthen compliance, while financial regulators questioned the rigor of its policies to prevent money laundering and the financing of terrorism on the platform.

According to former employees, Binance has been establishing a separate, fenced UK exchange through an FCA regulatory agency called Binance Markets Limited, which will provide cryptocurrency transactions to the British pound and the euro. It applied to become a registered British cryptocurrency company, but withdrew the application in May.

FCA stated that it disagrees with Binance’s answer to its questions this year. “FCA believes that the company’s response to certain issues amounts to a refusal to provide information, and that the company failed to adequately respond to FCA’s information request,” it said.

It also stated that Binance even refused to provide basic information, such as “the trading names and functions of all group entities worldwide.”

The exchange has indicated to FCA that its UK operations are separate from the rest of the global group. However, Binance’s internal documents seen by the “Financial Times” stated that “Binance is operating a business regulated by the FCA” and pointed out 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 sincere discussions with UK regulators.”

The FCA notice also stated that Binance’s UK branch does not have any approved senior management personnel, 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 anti-money laundering reporting officer. It also recently hired former eToro executive Jonathan Farnell (Jonathan Farnell) as its director of compliance.

Zhao said last month that Binance “is hiring a large team with a strong compliance background.”

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