The United Kingdom’s Financial Conduct Authority (FCA) released a supervisory notice on Wednesday, stating that prominent crypto exchange Binance is incapable of being effectively supervised and exposes users to financial risk.
The FCA notice — originally dated June 25 — was in relation to Binance’s “complex and high-risk financial products” that pose a significant risk to the investors. It read:
“Based upon the firm’s engagement to date, the FCA considers that the firm is not capable of being effectively supervised.”
In the notice addressed to Binance Markets Limited, the FCA required the crypto business to halt activities that were authorized back in April 2018 such as advising, safeguarding and dealing in crypto investments.
Additionally, the financial watchdog has asked Binance to display the FCA’s decision that reads, “Binance Markets Limited is not permitted to undertake any regulated activity in the UK.”
This means displaying the message prominently across Binance’s website and any other communication channels and social media. The exchange was also asked to take down the live advertisements and promotions and “provide written confirmation of the steps it has taken to meet the requirements.”
The FCA cited three main reasons for imposing restrictions on Binance, which include failing to carry out regulated activity, not satisfying the Effective Supervision Threshold Condition, and not securing an appropriate degree of protection for consumers.
According to the notice, Binance has also failed to share a final draft of its business plan and strategy that demonstrates prominent measures against money laundering and terror financing. In this regard, Binance told:
“We are committed to working with regulators and policymakers to develop policies that protect consumers, encourage innovation, and move our industry forward.”
Binance has been at the receiving end of regulatory heat across the globe and has amped up efforts to comply. In this effort, the crypto exchange has imposed lower leverage options and strict Know Your Customer requirements for all Binance users.
The exchange has denied all allegations of market manipulation but still faces resistance from numerous jurisdictions including Germany, Malaysia and South Korea.