The world’s largest exchange has shifted jurisdictions without establishing a central headquarters, as it played regulatory deviations.
The United Kingdom’s Financial Conduct Authority (FCA) sent out a statement on Wednesday, which indicated that Binance, one of the world’s most popular cryptocurrency exchanges, is incapable of being properly overseen and offers a significant financial risk to consumers.
Binance was subject to an FCA warning dated June 25 that spoke of its “complex and high-risk financial products” which represent a danger to investors. The first letter stated: “The FCA thinks that the business is incapable of being properly supervised.”
The FCA made a note in a letter to Binance Markets Limited to cease operations such as helping and dealing with crypto investments, which had been allowed just a few months before. In addition, the UK’s financial watchdog has ordered Binance to post the Financial Conduct Authority’s ruling, which states that Binance is “not authorized to perform any regulated activity in the UK.”
This implies that the message is shown prominently through the website and any other communication channels including social media. The organization was also requested to remove the live ads and promotions and to submit written proof of its compliance efforts.
According to the FCA, the following factors explain why it has chosen to impose limits on Binance: (1) It fails to execute the regulated activity, (2) it does not meet the Effective Supervision Threshold Condition, and (3) it fails to ensure a sufficient degree of consumer protection.
Binance has not shared a finished draft of its business plan and strategy, as per the notification, in which major steps to prevent money laundering and terrorism funding are shown. Binance informed Cointelegraph: “We will cooperate with regulators and lawmakers to help create and implement regulations that protect consumers, foster innovation, and support growth in our industry.”
Binance has had to deal with heavy regulatory scrutiny in several countries and has stepped up its attempts to cooperate. Binance, the crypto exchange, has taken measures to combat risk by lowering the leverage and increasing the KYC requirements for all customers.
In response to charges of market manipulation, the exchange denied everything, but still faces opposition from Germany, Malaysia, and South Korea, among other countries.