Binance, one of the world’s leading cryptocurrency exchanges, has been banned from operating in the UK.
Cayman Islands-based Binance allows people to buy and sell a wide range of digital assets. It has attracted attention from regulators who have expressed growing concern about the ease with which cryptocurrencies can be used to facilitate crime and launder the proceeds.
The UK’s Financial Conduct Authority (FCA) has also issued repeated warnings that investors in crypto can lose all of their money.
But what exactly does the UK ban on Binance mean for customers?
What has the regulator said?
The FCA said Binance Markets Ltd, Binance’s only regulated UK entity, “must not, without the prior written consent of the FCA, carry out any regulated activities … with immediate effect”.
“Due to the imposition of requirements by the FCA, Binance Markets Limitd is not currently permitted to undertake any regulated activities without the prior written consent of the FCA.”
The FCA said Binance appeared to be offering British customers a range of products and services via its website, Binance.com.
Binance had applied to become authorised by the FCA but withdrew its application last month.
In January, the FCA banned companies sales of cryptocurrency derivates and exchange-traded notes to retail investors.
These products allow people to bet on the price of assets such as bitcoin without actually buying them. Derivatives can multiply potential returns and losses many times over.
What does it mean for UK customers?
Binance said the move would have no impact on people’s ability to trade through its Binance.com website.
Customers can still access the company’s services through the website which is not based in the UK so falls outside the FCA’s jurisdiction.
Binance must display a warning on its website stating that it does not have permission from the regulator to operate in the UK.
Rabya Anwar, partner at Keystone Law, said the order sent a “clear signal” to the entire crypto market.
“Other cryptocurrency exchanges and related market participants should watch closely, prepare carefully and be under no illusions – Binance is unlikely to be the only target.”
“In addition to being ordered to display a stark notice on its website and social media regarding its lack of permissions, Binance may need to also undertake some intense procedural tasks within an eye wateringly tight timeframe – just a few days.
“Binance will then need to confirm completion to the FCA. Other cryptocurrency exchanges and relevant providers would be well advised to take note and undertake similar exercises immediately.”
How has the ban impacted prices?
While previous announcements by US and Chinese regulators have caused major movements in crypto markets, the FCA’s latest change barely made a ripple.
Prices of the major cryptocurrencies did not react to the news with bitcoin continuing to trade above $34,000 on Monday.