Issue link: https://maltatoday.uberflip.com/i/1390871
8.7.2021 6 INTERNATIONAL NEWS THE Financial Conduct Authority (FCA), the UK's highest financial audit- ing authority, issued a consumer warn- ing on June 26 about cryptocurrency exchange platform Binance, saying that UK operations arm Binance Markets Limited "is not permitted to undertake any regulated activity in the UK". Since the FCA issued the warning over the safety and security of cryptocurren- cy exchange platform Binance, the com- pany has been under greater scrutiny from customers, regulators and banks alike. e move came as part of a wave of international action from state author- ities across the globe who have grown alarmed by crypto's rapid rise and cen- trality to emerging avenues for money laundering and organised crime. On June 21 the Chinese Government declared that it would be clamping down on the considerable amount of cryptocurrency mining taking place in the country, with the impact of the an- nouncement seeing Bitcoin, Dogecoin and Ethereum prices tumbling. South Korea, another crypto hot- spot, recently seized the cryptoassets of around 12,000 citizens accused of tax evasion totalling over $47 million in val- ue, while the Metropolitan Police made the UK's largest cryptocurrency seizure yet in a crackdown on laundering seiz- ing an estimated £114 million worth of cryptocurrency. What is Binance? Binance is a cryptocurrency exchange platform which is used worldwide by people looking to trade cryptocurren- cies like Bitcoin, Ethereum and more, with its website offering a centralised platform through which to participate in decentralised monetary exchange by buying, selling or getting loans secured by cryptoassets. Based primarily in the Cayman Is- lands, Binance Group has an assort- ment of entities worldwide which in- clude London-based Binance Markets Limited. Despite being recently awarded a Let- ter of Commendation sent by the UK South East Regional Organised Crime Unit for "[their] cooperation in assisting our investigations relating to the Supply of Class A Controlled Drugs via the Dark Web", Binance has now become a greater subject of scrutiny by regulators in the UK. Did the FCA ban Binance? e FCA said in their statement that Binance Markets Limited, a subsidiary of the larger Binance Group corpora- tion, "is not permitted to undertake any regulated activity in the UK" and under FCA requirements cannot attempt to do so "without the prior written con- sent of the FCA". is decision from the financial au- thority comes after plans for a new reg- ulated 'Binance UK' affiliate company and crypto exchange based in the UK failed to materialise. In addition to this, the FCA issued a consumer warning over Binance Group and the services offered on its website, Binance.com, to UK users – informing them of the risks of using Binance.com and investing in decentralised crypto- currency or cryptoassets which are not regulated by traditional state or mone- tary authorities. "No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regu- lated activity in the UK," the FCA added. "e Binance Group appear to be of- fering UK customers a range of prod- ucts and services via a website, Binance. com." Describing itself as 'the world's largest crypto exchange', Binance and similar exchanges must be registered with the FCA in order to operate fully and pro- mote their services in the UK. And while cryptocurrencies like Bit- coin and Ethereum are unregulated, some cryptoasset derivatives like fu- tures contracts and contracts for differ- ence - allowing traders to bet on the fu- ture price movements of crypto rather than buy actual cryptocurrencies – are regulated by the FCA. Binance tweeted in response to say that the FCA's notice "has no direct im- pact on the services" it provides on its exchange platform. "BML is a separate legal entity and does not offer any products or services via the http://Binance.com website. "e Binance Group acquired BML May 2020 and has not yet launched its UK business or used its FCA regulatory permissions." e FCA's consumer warning and clampdown is not totally unsurprising, however. Similar statements to the FCA's re- garding Binance services and opera- tions were issued in Japan and the Cay- man Islands where Binance is primarily based. It was recently revealed by Bloomberg that the huge crypto exchange's com- pany Binance Holdings Ltd is under investigation by multiple US federal departments, including the US Justice Department, the Internal Revenue Ser- vice and the Commodity Futures Trad- ing Commission, for potential criminal activity. ailand's Securities and Exchange Commission filed a criminal complaint against Binance on Friday July 2, for operating certain cryptoasset services without a license after Binance failed to provide written correspondence in re- sponse to the body's initial warning in April. How have Binance's UK customers been affected? UK customers using Binance services will still be able to use the platform, but the FCA's warning urges consumers to take care and be aware of the greater risks when investing in cryptocurrency. e FCA does, however, have a dead- line of March 31 2022 which crypto as- set businesses must meet and register by in order to continue trading in the UK Key to FCA concerns around cryp- tocurrency operations is the rise of scams taking place through social me- dia platforms, where users are often ap- proached out of the blue for investment opportunities in coins like Bitcoin, Dogecoin and Ethereum. According to the FCA, those using such platforms and trading in cryp- to "should do further research on the product you are considering and the firm you are considering investing with." On June 28, UK-based users began reporting that following the confusion over Binance's future in the UK, they were unable to make Faster Payment deposits or withdrawals with GBP from their Binance accounts. ose logging into their account and preparing to make withdrawals were confronted with a notice that the pay- ment channel allowing UK users to make fast withdrawals from their ac- counts in GBP sterling was 'under maintenance'. Despite since being resolved, the issue left many UK Binance users frustrated and sceptical as to the timing of this maintenance, with it coming just hours after news of the FCA's warning and ban on Binance Markets Limited broke on- line. Binance has now displayed a notice on its UK website as per the requirements of the FCA statement. Has Barclays stopped payments to Binance? On Monday, Barclays bank informed UK customers who had previously made payments to Binance that it has blocked payments to the platform until further notice, telling customers that this was done "to help you keep your money safe". Barclays customers received the fol- lowing message: "As you've made a payment to Binance this year, we wanted to let you know that we're stopping payments made by credit/debit card to them until further notice. is is to help you keep your money safe. For further info please search FCA Binance online." A Barclays spokesperson said: "With effect from today, Barclays intends to stop credit and debit card payments to Binance. is action does not impact on the ability for customers to withdraw funds from Binance. e decision has been taken following the FCA warning to consumers, to help keep our custom- ers' money safe." Once again, Binance took to Twitter and responded to what it called a "dis- appointing" move from partners such as Barclays, citing it as "based on what appears to be an inaccurate under- standing of events". ey added: "We take our compliance obligations very seriously, and we are committed to working collaboratively with regulators to shape policies that protect consumers, encourage innova- tion, and advance the industry." Barclays blocks payments to crypto exchange Binance days after FCA ban on UK arm