If you’ve been watching out for the latest in crypto news, then it’s no news to you about the recent move by the UK Financial Conduct Authority (FCA) against the activities of Binance in the country. The FCA recently banned Binance Markets Limited (BML) from operating in the UK. It expressly stated, “Binance Markets Limited is not permitted to undertake any regulated activity in the UK.” This comes amid the growing crackdown on crypto across the globe. China also recently ordered the shut down of crypto miners in the Sichuan province.
Earlier this year, the FCA had directed that all crypto-related firms be registered before conducting any form of crypto activities in the UK. The registration however, was done temporarily until July. The FCA says the majority of crypto firms were yet to register. This is in a bid to ensure that these companies comply with anti-money laundering (AML) regulations.
According to the FCS spokesman, “A significantly high number of crypto-asset businesses are not meeting the required standards under the money laundering regulations, which has resulted in an unprecedented number of businesses withdrawing their applications.”
For the people living in the UK, this ban means they are not allowed to speculate on crypto prices i.e. crypto derivatives (CDs). However, this doesn’t mean they cannot use the main Binance.com website to trade crypto. Binance has stated that the directive from FCA has no direct impact on the services they provide on the website Binance.com.
According to Binance’s statement to the BBC, “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.”
Those living in the UK can also still access Binance’s services on derivatives and crypto price speculations via other regions outside the UK.
With the current rise in the popularity of cryptocurrencies and institutions like Tesla, Goldman Sachs, PayPal and several others showing support for cryptocurrencies, there has been an unprecedented increase in their mainstream adoption. This has pushed government authorities around the world to call for their regulation. According to the FCA, over 2 million Brits now have cryptocurrencies. The regulation push has also been followed by central banks exploring the idea of creating their own central bank digital currency (CBDC). Regulation creates more clarity and ultimately builds trust in the greater crypto ecosystem. It’s not a matter of “if” but a matter of “when”.
The growing number of frauds and scams in the crypto space do not help matters as well. According to a Cryptocurrency Scam Report by Bolster, there was a 40% increase in crypto frauds in the year 2020 as compared to 2019. We’re talking over 400,000 crypto scams in 2020 alone. This forms part of the reasons government authorities are seeking to ensure the crypto space is regulated and users are protected from such frauds. The space is still very new so DYOR!
The current FCA ban only further stresses the interest of government authorities in instituting proper regulations for the crypto space. With similar regulatory moves in China, Japan, Canada and several other countries, the calls for regulation appear to continue to grow. We may be approaching an era where the crypto space is going to be properly regulated. We can only keep our fingers crossed to see what the future unfolds in the face of new policies and rules. No matter what happens, regulation will have to evolve and catch up with rapid tech innovation. That’s when we see the ripest moments for DeFi and blockchain.