Binance, the world’s largest cryptocurrency exchange by trading volume, has decided to cancel the registration of its inactive subsidiary in the United Kingdom. The move comes amid increasing regulatory pressure on the crypto industry in the country and around the world.
Binance Markets Limited (BML), a UK-based entity acquired by Binance in 2020, had applied for registration with the Financial Conduct Authority (FCA), the UK’s financial watchdog. The registration was part of Binance’s plan to launch a regulated business in the UK, offering crypto trading and other services.
However, BML never became operational in the UK, and Binance decided to withdraw its application on May 30, 2023. The FCA confirmed the cancellation of BML’s registration on June 7, 2023, stating that the firm is no longer authorized to conduct any regulated activity in the UK. According to Binance, the cancellation of BML’s registration did not have any impact on its global operations, as it had never offered any services under BML in the UK. Binance said that it continues to serve its customers in the UK through its other entities and platforms.
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The cancellation of BML’s registration in the UK is not an isolated incident, but rather a reflection of the growing challenges that Binance faces from regulators globally. In recent months, Binance has faced scrutiny and restrictions from authorities in several countries, including the United States, Germany, Japan, Canada, Singapore, Thailand, Nigeria and Malaysia.
Some of the issues that regulators have raised about Binance include its lack of authorization to offer certain crypto services, its compliance with anti-money laundering and consumer protection rules, its transparency and accountability, and its cooperation with law enforcement agencies. Binance has responded to these regulatory actions by adjusting its operations and services in different jurisdictions, as well as enhancing its compliance and risk management capabilities. Binance has also hired several former regulators and industry experts to join its leadership team and advisory board.
Binance’s CEO Changpeng Zhao (CZ) has repeatedly stated that Binance respects and follows local laws and regulations, and that it is willing to work with regulators to find solutions that benefit both the industry and the public. CZ has also expressed his vision of transforming Binance into a fully regulated financial institution that can offer a wide range of crypto products and services to customers worldwide.
Why Binance Canceled Its UK License, Continues European Market Exit
Binance, the world’s largest crypto exchange by trading volume, has been facing increasing regulatory pressure in various countries. The latest blow came from the United Kingdom, where Binance’s subsidiary Binance Markets Limited (BML) canceled its registration with the Financial Conduct Authority (FCA), the country’s main financial regulator.
BML was acquired by Binance Group in 2020 and intended to launch a regulated business in the UK. However, this attempt was not successful and BML remained dormant since its acquisition. According to the FCA, BML submitted a cancellation request of its permissions on May 30, 2023, and is no longer authorized by the FCA to conduct any regulated business in the UK.
The FCA also stated that no other entity in the Binance Group holds any form of UK authorization or registration to offer regulated services in the UK. This means that Binance.com, the global platform of Binance, is also not permitted to operate in the UK without a license. Binance.com users in the UK can still access the platform and trade cryptocurrencies, but they are not protected by any local laws or regulations. The FCA warned consumers of the risks involved in investing in crypto assets and urged them to be wary of adverts promising high returns.
Binance’s sub-regional manager for growth in the UK and Europe, Ilir Laro, confirmed that BML has never conducted any type of regulated business in the UK and that Binance.com is not affected by the cancellation. He also said that Binance still holds five regulated entities in Europe, including Poland, Italy, France, Spain, and Sweden. Laro explained that Binance is moving its focus to getting ready for the Markets in Crypto-Assets Regulation (MiCA), a proposed EU-wide framework for crypto regulation that is expected to come into force in 2024 or 2025. He said that this means some consolidation in order to passport throughout Europe.
Binance’s Regulatory Troubles
The cancellation of BML’s registration is not the first regulatory setback for Binance. The exchange has been facing scrutiny from regulators around the world over its compliance with anti-money laundering (AML) and consumer protection rules. In June 2021, the FCA issued a consumer warning against Binance.com and ordered it to stop offering any regulated services in the UK. The FCA also required Binance to display a notice on its website and social media channels informing UK customers that it is not authorized to operate in the country.
In July 2021, Binance announced that it would stop offering futures and derivatives products to customers in Germany, Italy, and the Netherlands, following similar bans in Hong Kong and Ontario, Canada. The exchange also suspended euro deposits via SEPA bank transfers due to “events beyond our control”. In August 2021, Binance said that it would cease offering crypto trading pairs and payment options in Singapore dollars after receiving a warning from the Monetary Authority of Singapore (MAS). The MAS also added Binance.com to its investor alert list of unregulated entities.
In September 2021, Binance stopped offering services in Norway after failing to obtain a local license from the Financial Supervisory Authority of Norway (Finanstilsynet). The exchange also faced investigations from regulators in Japan, Thailand, Malaysia, Brazil, and the US.
Despite the mounting regulatory pressure, Binance has maintained that it is committed to complying with local laws and regulations wherever it operates. The exchange has also taken steps to improve its compliance and governance standards. In July 2021, Binance hired former US Treasury criminal investigator Greg Monahan as its global money laundering reporting officer. In August 2021, Binance appointed former eToro executive Richard Teng as the CEO of Binance Singapore. In September 2021, Binance named former US Senator Max Baucus as its policy and government relations advisor.
Binance’s founder and CEO Changpeng Zhao (CZ) has also expressed his willingness to step down from his role if a more suitable leader can be found. He said that he is open to working with regulators and finding a way for Binance to become a licensed financial institution globally.