Binance remains under fire from the FCA
The Financial Conduct Authority (FCA) has issued a damning statement saying that it is “not capable” of effectively supervising the world’s largest cryptocurrency exchange Binance, while reiterating the risk its products could pose to consumers.
Binance has been under pressure from global regulators over recent weeks, with the FCA deciding to ban the centralised exchange from conducting all regulated activity in the UK back in June for failing to report in line with its anti-money laundering regulation.
In a document published on Wednesday (25 August), the UK financial watchdog expanded on the reasons for imposing stringent requirements on the crypto exchange, which include placing a notice on its website stating that it is not permitted to conducted any regulated activity in the UK, removing any advertising and financial promotions, and a raft of other requirements.
In the statement, the FCA said: "Based upon the firm's engagement to date, the FCA considers that the firm is not capable of being effectively supervised.
"This is of particular concern in the context of the firm's membership of a global group which offers complex and high-risk financial products, which pose a significant risk to consumers."
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The FCA considers Binance to be in breach of several regulatory requirements, including failing to satisfy the effective supervision threshold condition.
Specifically, the FCA stated that Binance has refused to answer questions about its wider global business model, and refused or was unable to provide information about the wider products offered via Binance.com.
At the time, Binance said: "[S]ome of the FCA's questions relate to the overall Binance group arrangements and certain corporate information relating to the Binance group.
"Other than the Binance entities disclosed above, other entities in the Binance group have no involvement whatsoever with Binance Markets Ltd (BML) and the UK business."
With regards to the second question, the firm added: "The legal entities in the Binance group that trade through Binance.com are not involved with any activities that take place by BML. We therefore do not consider this question to be appropriate, or in any way relevant, to BML's application."
The FCA also said Binance had failed to answer questions with regard to the Binance Stock Tokens, failing to provide clarification on the legal and regulatory status of the product or send a product prospectus to the FCA.
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As a result of this, the FCA considers that Binance has "failed to carry on a regulated activity for a period of over 12 months", and therefore sees the requirements it has imposed on the firm as "proportionate and appropriate".
"It is necessary to impose the requirements on an urgent basis given the seriousness of the risks and the need to protect consumers," the watchdog concluded.
According to Reuters, the crypto exchange, whose holding company is registered in the Cayman Islands, has scaled back its product offering and said it is committed to working with global regulators to comply with local rules.
Digital currency market analysis platform CoinGecko estimates Binance's 24-hour trading volume to be $29bn.
