Several weeks back, Britain’s Financial Conduct Authority (FCA) rejected Binance’s bid to formally register as a financial entity — and now it’s explaining why.
FCA on Binance: Too Unwieldy
The FCA published its Binance decision, and the big takeaway is that British authorities felt the crypto-based exchange was “incapable of being supervised properly,” making it a “significant consumer risk.”
FCA and Binance: A Brief History
The FCA’s most recent public statements on Binance aren’t the first time the two entities have crossed paths. For months, representatives from the crypto platform were communicating with the FCA about what the company needed to do to perform regulated financial activities in the UK.
But in June, negotiations broke down, and the FCA barred Binance from conducting certain types of transactions. The financial body also issued a consumer warning about what it saw as risks associated with the platform.
Why Is the FCA Worried?
What is the FCA’s main problem with Binance? It’s all about the money laundering — or more accurately, the potential for money laundering. Moreover, based on the reasoning, the FCA appears to be worried about consumers’ ability to navigate the complexities of crypto.
Specifically, the decision read in part:
“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.”
In addition to money laundering and supervisory concerns, the FCA may have also followed the lead of other international legislative bodies who are turning up the pressure on certain digital currency exchanges.
What’s Next for Binance
As of now, Binance, which is registered in the Cayman Islands, has been laying relatively low. Word on the street is that the company may be scaling back a bit to focus on improving relations with worldwide regulators.
Connect With a Cryptocurrency Law Firm
The Kelly Law Firm works with cryptocurrency and blockchain companies across the United States and around the world. As early adopters, we’ve practiced in the vertical for several years and understand the niche well.
Managing attorney Aaron Kelly has served as in-house counsel for a blockchain startup and now works with firms entering the space.
Our cryptocurrency legal practice can help with:
- NFT auctions and sales
- Blockchain and cryptocurrency business formation
- Registration compliance (state, federal, and international)
- Smart contract drafting and auditing
- Partnership and investment negotiations
- Intellectual property issues
If you have any blockchain or cryptocurrency legal matters, we’re here to help. Get in touch today. Let’s start the conversation.
