UK’s finance watchdog declares Binance is 'not capable’ of being supervised

The FCA has clamped down on Binance. Photo: Getty Images
The FCA has clamped down on Binance. Photo: Getty Images

The UK's Financial Conduct Authority (FCA), which has in the past cracked down on Binance, has now said the world’s biggest crypto exchange platform is “not capable” of being supervised.

The FCA said: “Based upon the firm’s [Binance's] engagement to date, the FCA considers 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."

A Binance spokesperson told Yahoo Finance that it has fully complied with all aspects of its requirements.

"We continue to engage with the FCA to resolve any outstanding issues that may exist," they said, adding that "as the cryptocurrency ecosystem industry continues to grow and evolve we are committed to working with regulators and policymakers to develop policies that protect consumers, encourage innovation, and move our industry forward.”

But the FCA said Binance was meant to offer regulated activities to its customers once it had decided upon its business plan and strategy but as of 23 June; the regulator had not been notified of any such plan.

Read more: Why the UK banned Binance and what it means for your crypto assets

“It therefore appears to the FCA that the firm is not currently carrying out regulated activities, and that it has not done so for over 12 months.”

Wave Financial's Matteo Dante Perruccio told Yahoo Finance that "this is an interesting indicator of the complexities of regulating the new digital asset ecosystem."

"It only highlights the increasing importance of the need for regulatory clarity. Institutional investment will accelerate only when investors can be sure that the counter parties they are investing or working with are regulated."

Earlier, the FCA had issued a warning to consumers that Binance is not permitted to undertake regulated activities in the UK and ordered the platform to remove all advertising and financial promotions.

The company was also required to make clear on its website, social media platforms, and all other communications that it is no longer permitted to operate in the UK, and must not carry out any regulated activities in Britain without prior consent.

In January, the FCA had warned consumers about the dangers of investing in cryptocurrency.

“Investing in cryptoassets, or investments and lending linked to them, generally involves taking very high risks with investors’ money,” the FCA said. “If consumers invest in these types of product, they should be prepared to lose all their money.”

Watch: What are the risks of investing in cryptocurrency?