UK FCA Says It Is ‘Not Capable’ To Oversee Binance Crypto Exchange
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One of the world’s leading financial regulators said he was “unable” to properly oversee Binance despite the “significant risk” posed by the cryptocurrency exchange’s products, which allow consumers to take supercharged bets.
Binance is one of the world’s largest crypto exchanges, facilitating hundreds of billions of dollars in transactions every month.
But the Financial Conduct Authority said Binance’s UK subsidiary had “failed” to meet some of its basic queries, making it impossible to oversee the sprawling group, which has no fixed headquarters and offers services worldwide.
The admission underscores the scale of the challenge authorities face in addressing the potential risks to consumers purchasing frequently unregulated products through nimble cryptocurrency firms, which can often bypass national bans by donating users access to facilities based abroad.
The FCA censored Binance two months ago, saying the company was not authorized to offer conventional financial services or offer a crypto exchange in the UK. Regulators in other major financial centers have also expressed concern about Binance, but the company has continued to offer crypto trading to consumers around the world.
The UK regulator said on Wednesday that Binance’s “complex and high-risk financial products” posed “a significant risk to consumers.”
He added that one of the London-based affiliates of Binance, which is registered with the watchdog as an investment company, provided insufficient information about the products of the wider group on offer in the UK. Uni, as well as other business details. This meant that Binance, incorporated in the Cayman Islands, “was not able to be supervised effectively,” he said.
Binance said it continues to “engage with the FCA to resolve any outstanding issues that may exist.” He added that he had complied with a series of requirements the FCA put in place in June, including posting notices on its website.
The FCA has issued a series of warnings from regulators around the world against trading crypto. However, UK consumers can still trade derivatives and other regulated products on Binance.com. The exchange does not have a formal seat and uses subsidiaries in different jurisdictions to access the conventional financial banking system.
Changpeng Zhao, its chief executive, has pledged to strengthen compliance, as financial watchdogs question the stringency of its money laundering and terrorist financing prevention policies on its platform.
Binance had built a separate, ring-fenced UK stock exchange through an FCA-regulated unit called Binance Markets Limited that allegedly allowed cryptocurrencies to be traded against the pound and the euro, according to former employees. It had applied to become a registered UK crypto company, but withdrew that request in May.
The FCA said it took issue with Binance’s responses to the questions it raised this year. “The FCA considers that the company’s responses to certain questions amounted to a refusal to provide information, and that the company has not adequately responded to the FCA’s information requirements,” he said. he declares.
He also said that Binance refused to provide even basic information, such as “trade names and functions for all group entities in the world.”
The exchange has told the FCA that its UK operations are separate from other parts of the global group. But internal Binance documents seen by the Financial Times state that “Binance operates an FCA regulated business” and notes that “consumers will be subject to FCA regulatory guidelines.”
Binance said: “The information provided to the FCA is correct and we continue to have good faith discussions with the UK regulator.”
The FCA notice also said the UK branch of Binance did not have any approved senior executives, although it had submitted applications for executive director, compliance oversight and anti-money laundering positions. money.
The group said earlier this month that it hired former U.S. Internal Revenue Service special agent Greg Monahan as the global head of anti-money laundering. He also recently hired former eToro executive Jonathan Farnell as Chief Compliance Officer.
Zhao said last month that Binance “is hiring a very large team of people with very strong compliance backgrounds.”