13 ms·

UK regulator clamps down on Binance

408 points by lakis 5y ago

n_ary 5y ago
> While the FCA does not regulate crypto-currencies, it does regulate cryptoassets. Firms must be authorised [...]to advertise or sell such products in the UK. > This means that people in the UK are not allowed to use Binance's services to speculate, or bet > However, they are still allowed to use the website to purchase and sell crypto-currencies, which is not regulated So, all is well, just don't bet, speculate. Just buy and sell?
- ipnon 5y ago
  Binance offers a variety of derivatives, synthetics and even user created tokens. The cynical take is that crypto threatens the City of London's monopoly on products like these.
  - d4rti 5y ago
    The more rational take is that the FCA is acting to protect UK citizens from potentially dangerous financial products from an unauthorized organisation.
    - botwriter 5y ago
      ah good old nanny state, Although knowing the city of London its probably a protection racket!!!
    - meowkit 5y ago
      Can you describe how these financial products are “dangerous”? Because they could be rug pulls? I disagree that citizens need to be “protected” from speculation. Governments should monitor markets and go after scammers when they act, not shut down the markets entirely.
      - consp 5y ago
        I guess your assumption is people know what they are doing. Looking at legal bank products with derivates and who got into other speculative products in the past decades most people didn't see they were being manipulated into buying a product for which the risks where greater than they could afford. This is a different stance from the America libertarian view of "everyone is responsible for their own actions" mostly because the balance of power is greatly in favour of the companies.
        meowkit 5y ago
        > I guess your assumption is people know what they are doing. My assumption is most people do not know what they are doing when it comes to trading equities or derivatives. There are other solutions to your concerns - namely required training explaining risks, an approval process, and not allowing derivatives to be recommended by platforms. Outright bans come from ulterior motives or incompetence. My stance is not what you have presented. If I had to briefly summarize my stance: let people make reasoned decisions for themselves, and provide safeguards to mitigate the most common accidents.
        3np 5y ago
        Notable that US legislation does not take this “America libertarian view”. Like how a huge class of investments are not legally accessible to anyone who’s not an “accredited investor”, with requirements such as 1M$ net worth.
      - MikeDelta 5y ago
        The problem is not speculation or market risk, but leverage. Say you covert 1000 USD into BTC, and you can convert back without costs. If BTC goes up 100%, you should be able to get back 2000 USD. If BTC goes to 0, you get zero. Leverage is 1 as your return relates 1:1 to the return on BTC. Now let's look at leverage, say we take a leverage of 100 (not a crazy amount). This means that your return in USD goes 100x the return in BTC, so if BTC goes up 1% you earn 100% (and walk away with 2000 USD). It also means that if BTC goes down 1%, you lose everything. The other thing is that if you have insufficient margin, the venue close down your position by putting it on the market. If BTC has a short dip and quickly recovers, the venue will have closed down your position at the point where you lost your margin (all your money). This can be exactly the -1%, but depends on the market and the liquidity. If BTC will go up 10% but does so in a noisy way, you might be right but the venue could have closed down your position the moment BTC touched -1% during the random movements. Eveb worse, say that BTC drops 10% in a very rapid move because of some tough news and panic. The venue puts the orders to sell your position at the -1% mark but because of lack of liquidity these orders get filled at -10% and your loss becomes 10.000 USD. Even if BTC recovers quickly, you keep your loss because the position is closed. That is the problem. So, in a nutshell, with unleveraged investing you can lose everything, but with leveraged investing you can end up in serious debt.
    - FreeSpeech 5y ago
      It's coronation disguised as regulation. Casinos and fruit machines are moral, but crypto is not?
      - headmelted 5y ago
        Not going to speak on the FCA’s motives but this is a pretty easy ruling for them to defend. If as the article states the exchange itself is promising certain returns then it doesn’t comply with the law and absolutely is breaking the rules. Financial products in the UK (and most other markets) can’t advertise any returns that aren’t guaranteed without pretty clear and specifically worded disclaimers. The FCA isn’t singling anyone out in applying this rule here that I can see. As per usual, the upshot here is that most crypto holders still think these are all new concepts and don’t realise that the rules are based on hundreds of years of experiences and consequences.
        ipnon 5y ago
        I 100% agree with you that the regulators have the legal advantage here but I am less convinced of the public benefit. The popularity of Binance must indicate some demand for the product.
        Qworg 5y ago
        There are many popular things that are not in the public benefit, usually things that have socialized losses and indeterminate assignation of costs.
        AndrewDucker 5y ago
        Of course there's demand for returns that are higher than the norm! But unless they can guarantee those returns they're acting fraudulently. "There's demand for my perpetual motion machine!" is not a good argument.
        celticninja 5y ago
        They are only acting fraudulently if they say those returns are guaranteed and then dont guarantee them. AFAIK there was no claims that returns are guaranteed. What they have said is Binance cant offer regulated offerings such as derivatives and options, for which a licence from the FCA is required. Those licenses are given out easily enough to places like plus500 wc. They are essentially gambling, you dont buy securities/assets/stocks/currencies you just bet on price movements of those items.
    - lowkey 5y ago
      I think you may have just restated GP’s comment in Newspeak as explained by a banker from the City of London /s
    - dig1 5y ago
      Yet, they allow spread betting and CFDs, which are considered not less dangerous and are banned in many countries.
      - xwolfi 5y ago
        So Binance can just register normally
    - oarsinsync 5y ago
      > The more rational take is that the FCA is acting to protect UK citizens from potentially dangerous financial products from an unauthorized organisation. The keyword in your statement is 'unauthorised'. The FCA rarely acts to protect UK citizens from potentially dangerous financial products from authorised regulations. The last time I'm aware of, to ensure that retail gamblers cannot lose more than they stake in highly leveraged bets, was pushed through by ESMA, not the FCA. EDIT: added the post I was responding to, to add context.
      - mytailorisrich 5y ago
        > The FCA rarely acts to protect UK citizens from potentially dangerous financial products from authorised regulations. The job of the FCA, and of regulations in general, is not to shield people from risk and losses, it's to prevent scams and to make sure people are informed of the rules and of the risks. Basically the law is not there to prevent people from making bad decisions, it's there to ensure that they can make informed decisions.
        makomk 5y ago
        The whole reason that regulators had to step in was that companies absolutely were pushing these kind of complex, high-risk non-cryptocurrency financial products to ordinary consumers that didn't understand how they worked as a way to make money fast, through ads in mainstream places like YouTube.
        oarsinsync 5y ago
        Or on the front of football players shirts, in the form of sponsorships.
      - mschuster91 5y ago
        > The last time I'm aware of, to ensure that retail gamblers cannot lose more than they stake in highly leveraged bets, was pushed through by ESMA, not the FCA. Same here in Germany. We don't have access to US-style stonk options, to the great frustration of people seeing US redditors making bank with GameStop while all we had was hodl'ing the stock itself.
    - csomar 5y ago
      > FCA is acting to protect UK citizens More like protect their position as regulator. The UK (London) is home to many CFD exchanges which are more scammy (almost 100% scammy) compared to Binance (which is a legitimate exchange that happens to be dangerous to use if you don't know what you are doing).
      - helsinkiandrew 5y ago
        > that happens to be dangerous to use if you don't know what you are doing Exactly, Binance was heavily advertising on London Transport to people who probably don't know what they were doing: https://news.bitcoin.com/uk-bans-time-to-buy-bitcoin-ads-buses-underground/ https://news.bitcoin.com/uk-bans-time-to-buy-bitcoin-ads-bus...
        d4rti 5y ago
        And on YouTube targeting the UK market.
    - dna_polymerase 5y ago
      That would be the least plausible explanation of these events.
  - xwolfi 5y ago
    I think if Binance did all the same paperwork and processes as any other banks then it d be fine and the city would welcome them with open arms.
  - calpaterson 5y ago
    This is transparent nonsense because there is absolutely no overlap between the medium or large-sized business that wants to buy derivatives from JP Morgan and the retail investors who want to buy bitcoin. Are Rolls Royce (turbine manufacturer and part-time hedge fund) about to start buying forex derivatives from Binance? Seriously, seriously doubt it.
- JWoolfenden 5y ago
  Yeah, failing to comply with the FCA is a bold move for sure.
  - belter 5y ago
    Ignoring regulations did not seem to hurt AirBnb, Uber or Facebook...
    - Kbelicius 5y ago
      None of those are regulated by FCA.
      - sillysaurusx 5y ago
        I love that there's a real-life entity equivalent to DS9's FCA. https://www.youtube.com/watch?v=ousIWGfGJ2E&ab_channel=April5%2C2063 https://www.youtube.com/watch?v=ousIWGfGJ2E&ab_channel=April... This whole time I was like, "Wow, people here are talking about the FCA the way Americans talk about the SEC. But... Where have I heard of the FCA before?" Had no idea it was a real thing. (Or that companies should be as terrified of them as they are in the show.)
    - emouryto 5y ago
      Bravo! I wonder what these 3 companies have in common?
      - belter 5y ago
        These have in common that much of their initial growth occurred by regulatory capture or ignoring existing regulations. Its ok if you are a host...Terrible if your building has been taken over by Airbnb guests. But of course they are just a platform....Not an enabler.
- ghalvatzakis 5y ago
  > This means that people in the UK are not allowed to use Binance's services to speculate, or bet What will happen to the people that already bought such assets?
  - celticninja 5y ago
    You can still buy them and sell them. What you can't do is use leverage to bet on changes in the price as, for example, you can on https://www.plus500.co.uk/ https://www.plus500.co.uk/ Or any other number of Forex sites. These sites usually come with a warning that most users lose money. That you can lose more money than you have staked is the issue, but (I am assuming) the larger possible swings with crypto mean that both the upside and downside is even greater than with traditional fiat currency trading.
- rjknight 5y ago
  The distinction here is between buying and selling Bitcoin, and buying and selling contracts for difference or spread betting on Bitcoin’s price movements. The latter is more tightly regulated, as it can result in much larger gains or losses, including losses greater than the staked amount.
  - shoshino 5y ago
    Spreadbetting is tax-free in the UK and the FCA banned spreadbetting on bitcoin last year. IG, CMC and CityIndex all closed out client positions and delisted all crypto pairs.
  - adevx 5y ago
    "including losses greater than the staked amount" I don't think this is true. Binance will happily liquidate you well in advance of a possible negative balance.
    - _fat_santa 5y ago
      I was going to say, while technically there is the risk of loosing more than your stake, practically speaking you will be margin called long before that happens.
      - shapefrog 5y ago
        Ahh yes, I remember when people used to say that about trading in the trillion dollar a day foreign exchange markets. Then people lost 5 times their margin in the blink of an eye.
- Zenst 5y ago
  The crux really is the FCA raising a red flag so people who wouldn't normally think will maybe think before buying into the latest `invest in crypto` advert that have become widespread and the latest FOTM(flavour of the month). The other aspect for the FCA doing this, will be to curtail calls etc by those who get burned and go running to the FCA who can point out they told you so and it is nothing they can do as not under their remit. But yes, binance operates outside the UK (Cayman islands - which for me is always a red flag for anything finance), so the net effect upon operation will be zero. However, marketing wise - the foundations have been laid. One upshot of all this I hope is that web adverts (including youtube etc) may have to filter out these crypto investment ones and see UK residence not see any of them. Least that is my dream hope from this.
- shoshino 5y ago
  >> This means that people in the UK are not allowed to use Binance's services to speculate, or bet >> However, they are still allowed to use the website to purchase and sell crypto-currencies, which is not regulated These statements have since been removed from the article, because they're incorrect.
- deleted 5y ago
  [deleted]
egorfine 5y ago
> "BML is a separate legal entity and does not offer any products or services via the Binance.com website," said a Binance spokesman.
- flixic 5y ago
  BML actually stands for Binance Markets Limited, but my first thought was Binance Money Laundering.
- SideburnsOfDoom 5y ago
  I recall seeing that Binance has a few dozen employees total, worldwide. This limits exactly how "separate" it can be, right?
  - elliekelly 5y ago
    And, in my experience, the FCA doesn’t find this sort of pedantry too convincing. Where US regulators tend to more be deferential to each entity being separate (provided you’ve jumped through a few small governance hoops) the FCA tend focus on how the entities are actually functioning rather than what the paperwork says.
dw-im-here 5y ago
This is good for bitcoin
3np 5y ago
Bloomberg article with existing discussion: https://news.ycombinator.com/item?id=27651730 https://news.ycombinator.com/item?id=27651730
deleted 5y ago
[deleted]
cblconfederate 5y ago
... to clear the room for competitors
nullc 5y ago
In the UK there are many "contract for difference" exchanges, basically bucketshops. These products are outright unlawful in the US or at least are unlawful in retail-accessible forms. My understanding is that this action is only about CFD products on binance, not normal buying/selling Bitcoin. I find it weird that the UK allows so much access to these scam products in general, but I suppose it fits in with the general accessibility of gambling.
- nmca 5y ago
  Could you outline why you think CFD is a scam?
  - nullc 5y ago
    There are three layers to it: (1) CFD isn't an investment, it's just a side bet on the price of something else. It distorts the market for the underlying (by providing a highly uncontrolled supply of it) at the expense of creating tail risk (e.g. CFD house is fine for years and then poof everyone's money is gone). The damage from this doesn't apply to just CFD participants but potentially the market as a whole. (2) The particular mechanism of CFDs make them extremely ripe for fraud. CFD contracts are against the house so the house has an inherent conflict of interest with their customers. The CFD house can crunch the numbers, blow some money on the real market (or whatever subset contributes to their index price) to dip the price and wipe out a particular set of customers. Sometimes the index prices are based just on bid/ask -- there doesn't even need to be a real trade at the price. Manipulation is hard to detect, and the whole setup where the house is betting against you is unlike the normal situation for investments. It's even the case that CFD operators-- in the rare case where they detect a customer that appears to actually have positive returns, maybe due to insider info-- will start passing their orders through to another platform, and even riding along/front running them! (3) Specific CFD products usually have unreasonable terms such as absurd leverage where market volatility almost guarantees the customer will be wreaked. In theory some of this risk could be regulated out, but one can always construct a new product. So I think sure, you could have an honest CFD house with good controls and products with well shaped risked, and so on... and mitigate a lot of the problems but the incentives are all wrong. And worse, because much (though not all) of the CFD appeal is essentially to a gambling market, the customers actually want the highly volitional highly risky options, they want platforms that will be cheap until they implode, and so on. So in the long run, you shouldn't expect CFD operations to end well. Other products like ordinary options, or just regulated margin, let you make more complex trades without creating the bad incentives or market risks.
throaway46546 5y ago
The Ferengi Commerce Authority isn't to be trifled with.
- 0x0nyandesu 5y ago
  Leaving the Tower of Commerce, Brunt had this to say, "The Ferengi commerce authority will not sit idly by and allow profits to be made without getting our share. Let this be a lesson to all financial markets traders."
- i_am_new_here 5y ago
  Ferengi = Jews ?
- mkr-hn 5y ago
  I didn't even know they had jurisdiction on 21st century Earth.
  - mrleinad 5y ago
    Quark's trip to the past seems to have had unintended consequences.
- spmurrayzzz 5y ago
  I am so glad I am not the only person that thought this was a DS9 parody headline
- freedomben 5y ago
  Haha, exactly what I came here to say. > Brunt, FCA!
- myself248 5y ago
  Here I was wondering what Fiat Chrysler Automobiles was doing with Binance in the first place. Thanks for clearing that up!
igammarays 5y ago
Good. A precursor to banning crypto itself, I hope. The government SHOULD have a monopoly on certain things, like lethal force (armies), and issuance of currency, because total chaos and anarchy would happen otherwise.
- folli 5y ago
  I agree about the lethal force aspect, but can you elaborate on how issuing currency results in chaos and anarchy?
  - Zenst 5y ago
    Anything that can impact a countries control upon their own currency has the potential to destabilise things. Now whilst cypto is another currency, it is one that is very volatile and as we have seen, anything that volatile in a currency is always never good for the majority. Also to have any impact, such crypto's would need to become more widespread and whilst in geek land we may view things as common usage, your average citizen probably at best only just aware of their existence. Indeed I'd hazard a guess that most people in any country have never held currency beyond their local offering (though the dollar sure does come close and that in some countries).
  - ezekg 5y ago
    If a government has a monopoly on violence, then its citizens have no recourse to correct an evil or corrupt government. History shows time and time again that this is the case. In the case of the USA -- I don't think anybody here should want our government to have a monopoly on violence, given the USA's violent history. Trading such liberty for a sense of false security is unwise, in my opinion. The USA's founding fathers knew this.
- Geee 5y ago
  The idea of Bitcoin is that no one has the power to issue currency. Issuance is limited to 21 million units and all of them are created with energy. No one should have the power to issue currency.
streamofdigits 5y ago
There is a morbid satisfaction watching the formal financial system tie itself in knots as it tries to come to terms with an even worse version of itself. That large part of the financial system is glorified and useless gambling designed to extract rents by intermediaries is a matter of record [0]. Regulators have no problem with that, provided their rather arbitrary and self-servingly generous red lines are respected. So what is happening now is that new information technology (faulty and immature at best) is being used by cunning operators to tap into that ingrained behavioral pattern outside their purview. Yet what spoils the fun is the sense that (somewhere in a parallel universe) all the new digital gadgetry could somehow be used to make our economies more robust, more functional, more equitable, more sustainable,... more real and less financialised. [0] https://en.wikipedia.org/wiki/Financialization https://en.wikipedia.org/wiki/Financialization
- bvaldivielso 5y ago
  > That large part of the financial system is glorified and useless gambling designed to extract rents by intermediaries is a matter of record [0]. Financialization is not necessarily about useless finance taking bigger and bigger roles in the economy. Finance can be useful, and can get very complex, and so it could make sense that it became a big part of the economy. Now, I cannot say for sure that the finance industry is useful enough for it to be that big a part of the economy as it is, but I'm open to the idea (also open to the opposite idea). My point is that what you portray as a "matter of record" is a biased interpretation of what financialization is, not consensus (though may still be true).
  - streamofdigits 5y ago
    The wiki entry covers some disparate topics but serves as a broad brush pointer to the massively growing gdp share of the financial industry. It is a proxy for the number of redundant financial transactions (where bits are simply shifted around in zero sum re-allocation games for which intermediaries get a cut) to actual economic transactions where something "real" happens. There is obviously a bit of subjectivity in defining "real" and "useful". There is also an intermediate gray area of so-called risk management (derivatives, securitisation etc) which can easily mutate from useful to disastrous depending on the quality of regulation. But when I look at the crypto universe (from the ICO era till today) I have no doubt what it resembles...
ohbleek 5y ago
Title is misleading. Change it.
deepvibrations 5y ago
As much as I hate the 'FUD' label often given to anything negative in the crypto space, it is disappointing that even the BBC cannot use an honest title. Binance is not 'banned' as they say- this is misleading. I am in the UK and still using it, it is only the derivatives products that have been banned.
- d_theorist 5y ago
  I am still using it too. The BBC article is about as clear as mud, and I doubt that the person who wrote it even understood the story.
- elliekelly 5y ago
  > it is only the derivatives products that have been banned. This isn’t correct. It’s any regulated asset that’s been banned. Well... has always been banned. That includes derivatives but also “cryptoassets”. The distinction comes down to whether the FCA considers the product a “security token”, “e-money”, or currency. The first two being prohibited for sale by or through Binance (or any unauthorized entity) without first obtaining the FCA’s permission as they’re regulated products. More info about the distinction here: https://www.fca.org.uk/firms/cryptoassets https://www.fca.org.uk/firms/cryptoassets
avvt4avaw 5y ago
I thought it was worth clarifying exactly what has happened here, since neither the BBC nor the FT articles make it particularly clear. The entity that the FCA has acted against is Binance Markets Limited (BML) which the parent Binance Group acquired earlier this year, in part because of its existing registration with the FCA which allowed it to carry out a limited range of regulated activities in the UK. The FCA has now placed restrictions on BML which remove its ability to carry out those regulated activities -- however BML was not actually doing any business in the UK so the effect of this is limited. The FCA also issued a consumer warning which, among other other things, reiterated that no entities in Binance Group are registered with the FCA and therefore cannot carry out regulated activity in the UK. Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it. A possibly outcome is that Binance will be a bit more circumspect about offering derivatives trading to UK retail because they want to build a more substantial UK business in the future. We saw this with Bybit a while ago, where they do not allow UK retail to use their website (although they have an exception for sophisticated investors, who can self-certify as an eligible counterparty and continue to trade on Bybit). I wouldn't be surprised to see this.
- yholio 5y ago
  > Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it. Why would you say that? Providing services to any British citizen over the internet will fall squarely within the regulatory domain of the UK, regardless of the website used to connect, the physical location of the server or the jurisdiction of the company.
  - read_if_gay_ 5y ago
    Right, just like Facebook is certain to adhere to European privacy laws.
    - elliekelly 5y ago
emouryto 5y ago
... in the UK.
kerng 5y ago
There seem to be a lack of understand of spot vs. derivative markets here in this forum...
stevespang 5y ago
It's all because Binance had not agree to share part of the "hustle" or the "take" with the FCA. As already mentioned, The FCA has no enforceable jurisdiction over Binance, because Binance's physical and financial assets are not in the U.K.
nomoreplease 5y ago
I'm surprised $BTC's price has gone up despite this news. Actually I'm always surprised by BTC
- haskellandchill 5y ago
  Price is based on nonsense so I'm not surprised. With the shady exchanges and other suspicious players what does price really mean?
- tomtomistaken 5y ago
  Get your $BTC before exchanges are gone?
cpuguy83 5y ago
"Brunt, FCA!" I'm just picturing Brunt from ST:DS9 walking in and shutting them down.
digianarchist 5y ago
They've also ceased operations in Canada's largest province: https://www.coindesk.com/binance-pulls-out-of-ontario-following-actions-against-other-crypto-exchanges https://www.coindesk.com/binance-pulls-out-of-ontario-follow...
- px43 5y ago
  For those unfamiliar with the cryptocurrency space in general, Binance is the world's largest exchange because they are a global platform. They don't need to cater to western regulations. These regulations aren't cutting Binance out of western markets, they're cutting western citizens out of the largest cryptocurrency market, forcing them to use VPNs and other technologies to bypass the geo blocking. There are plenty of localized exchanges, like Coinbase, who play well with the regulators in certain geographies. This is not the market that Binance cares to cater to, and that's fine IMO. I'll never use Binance because as a US citizen, I don't feel like my deposits are safe there, mostly because US financial authorities love seizing bank accounts from companies they don't like. This is why the only crypto to USD bridge that I'll use is Coinbase. I feel like this stance is incredibly detrimental to the future of the economy of the country that I live in, but here we are. Hopefully US regulators (and Canada and UK etc) will realize the long term damage that they're doing before it's too late.

408 points by lakis 5y ago

> While the FCA does not regulate crypto-currencies, it does regulate cryptoassets. Firms must be authorised [...]to advertise or sell such products in the UK. > This means that people in the UK are not allowed to use Binance's services to speculate, or bet > However, they are still allowed to use the website to purchase and sell crypto-currencies, which is not regulated So, all is well, just don't bet, speculate. Just buy and sell?

ipnon 5y ago
Binance offers a variety of derivatives, synthetics and even user created tokens. The cynical take is that crypto threatens the City of London's monopoly on products like these.
- d4rti 5y ago
  The more rational take is that the FCA is acting to protect UK citizens from potentially dangerous financial products from an unauthorized organisation.
  - botwriter 5y ago
    ah good old nanny state, Although knowing the city of London its probably a protection racket!!!
  - meowkit 5y ago
    Can you describe how these financial products are “dangerous”? Because they could be rug pulls? I disagree that citizens need to be “protected” from speculation. Governments should monitor markets and go after scammers when they act, not shut down the markets entirely.
    - consp 5y ago
      I guess your assumption is people know what they are doing. Looking at legal bank products with derivates and who got into other speculative products in the past decades most people didn't see they were being manipulated into buying a product for which the risks where greater than they could afford. This is a different stance from the America libertarian view of "everyone is responsible for their own actions" mostly because the balance of power is greatly in favour of the companies.
      - meowkit 5y ago
        > I guess your assumption is people know what they are doing. My assumption is most people do not know what they are doing when it comes to trading equities or derivatives. There are other solutions to your concerns - namely required training explaining risks, an approval process, and not allowing derivatives to be recommended by platforms. Outright bans come from ulterior motives or incompetence. My stance is not what you have presented. If I had to briefly summarize my stance: let people make reasoned decisions for themselves, and provide safeguards to mitigate the most common accidents.
      - 3np 5y ago
        Notable that US legislation does not take this “America libertarian view”. Like how a huge class of investments are not legally accessible to anyone who’s not an “accredited investor”, with requirements such as 1M$ net worth.
    - MikeDelta 5y ago
      The problem is not speculation or market risk, but leverage. Say you covert 1000 USD into BTC, and you can convert back without costs. If BTC goes up 100%, you should be able to get back 2000 USD. If BTC goes to 0, you get zero. Leverage is 1 as your return relates 1:1 to the return on BTC. Now let's look at leverage, say we take a leverage of 100 (not a crazy amount). This means that your return in USD goes 100x the return in BTC, so if BTC goes up 1% you earn 100% (and walk away with 2000 USD). It also means that if BTC goes down 1%, you lose everything. The other thing is that if you have insufficient margin, the venue close down your position by putting it on the market. If BTC has a short dip and quickly recovers, the venue will have closed down your position at the point where you lost your margin (all your money). This can be exactly the -1%, but depends on the market and the liquidity. If BTC will go up 10% but does so in a noisy way, you might be right but the venue could have closed down your position the moment BTC touched -1% during the random movements. Eveb worse, say that BTC drops 10% in a very rapid move because of some tough news and panic. The venue puts the orders to sell your position at the -1% mark but because of lack of liquidity these orders get filled at -10% and your loss becomes 10.000 USD. Even if BTC recovers quickly, you keep your loss because the position is closed. That is the problem. So, in a nutshell, with unleveraged investing you can lose everything, but with leveraged investing you can end up in serious debt.
  - FreeSpeech 5y ago
    It's coronation disguised as regulation. Casinos and fruit machines are moral, but crypto is not?
    - headmelted 5y ago
      Not going to speak on the FCA’s motives but this is a pretty easy ruling for them to defend. If as the article states the exchange itself is promising certain returns then it doesn’t comply with the law and absolutely is breaking the rules. Financial products in the UK (and most other markets) can’t advertise any returns that aren’t guaranteed without pretty clear and specifically worded disclaimers. The FCA isn’t singling anyone out in applying this rule here that I can see. As per usual, the upshot here is that most crypto holders still think these are all new concepts and don’t realise that the rules are based on hundreds of years of experiences and consequences.
      - ipnon 5y ago
        I 100% agree with you that the regulators have the legal advantage here but I am less convinced of the public benefit. The popularity of Binance must indicate some demand for the product.
        Qworg 5y ago
        There are many popular things that are not in the public benefit, usually things that have socialized losses and indeterminate assignation of costs.
        AndrewDucker 5y ago
        Of course there's demand for returns that are higher than the norm! But unless they can guarantee those returns they're acting fraudulently. "There's demand for my perpetual motion machine!" is not a good argument.
        celticninja 5y ago
        They are only acting fraudulently if they say those returns are guaranteed and then dont guarantee them. AFAIK there was no claims that returns are guaranteed. What they have said is Binance cant offer regulated offerings such as derivatives and options, for which a licence from the FCA is required. Those licenses are given out easily enough to places like plus500 wc. They are essentially gambling, you dont buy securities/assets/stocks/currencies you just bet on price movements of those items.
  - lowkey 5y ago
    I think you may have just restated GP’s comment in Newspeak as explained by a banker from the City of London /s
  - dig1 5y ago
    Yet, they allow spread betting and CFDs, which are considered not less dangerous and are banned in many countries.
    - xwolfi 5y ago
      So Binance can just register normally
  - oarsinsync 5y ago
    > The more rational take is that the FCA is acting to protect UK citizens from potentially dangerous financial products from an unauthorized organisation. The keyword in your statement is 'unauthorised'. The FCA rarely acts to protect UK citizens from potentially dangerous financial products from authorised regulations. The last time I'm aware of, to ensure that retail gamblers cannot lose more than they stake in highly leveraged bets, was pushed through by ESMA, not the FCA. EDIT: added the post I was responding to, to add context.
    - mytailorisrich 5y ago
      > The FCA rarely acts to protect UK citizens from potentially dangerous financial products from authorised regulations. The job of the FCA, and of regulations in general, is not to shield people from risk and losses, it's to prevent scams and to make sure people are informed of the rules and of the risks. Basically the law is not there to prevent people from making bad decisions, it's there to ensure that they can make informed decisions.
      - makomk 5y ago
        The whole reason that regulators had to step in was that companies absolutely were pushing these kind of complex, high-risk non-cryptocurrency financial products to ordinary consumers that didn't understand how they worked as a way to make money fast, through ads in mainstream places like YouTube.
        oarsinsync 5y ago
        Or on the front of football players shirts, in the form of sponsorships.
    - mschuster91 5y ago
      > The last time I'm aware of, to ensure that retail gamblers cannot lose more than they stake in highly leveraged bets, was pushed through by ESMA, not the FCA. Same here in Germany. We don't have access to US-style stonk options, to the great frustration of people seeing US redditors making bank with GameStop while all we had was hodl'ing the stock itself.
  - csomar 5y ago
    > FCA is acting to protect UK citizens More like protect their position as regulator. The UK (London) is home to many CFD exchanges which are more scammy (almost 100% scammy) compared to Binance (which is a legitimate exchange that happens to be dangerous to use if you don't know what you are doing).
    - helsinkiandrew 5y ago
      > that happens to be dangerous to use if you don't know what you are doing Exactly, Binance was heavily advertising on London Transport to people who probably don't know what they were doing: https://news.bitcoin.com/uk-bans-time-to-buy-bitcoin-ads-buses-underground/ https://news.bitcoin.com/uk-bans-time-to-buy-bitcoin-ads-bus...
      - d4rti 5y ago
        And on YouTube targeting the UK market.
  - dna_polymerase 5y ago
    That would be the least plausible explanation of these events.
- xwolfi 5y ago
  I think if Binance did all the same paperwork and processes as any other banks then it d be fine and the city would welcome them with open arms.
- calpaterson 5y ago
  This is transparent nonsense because there is absolutely no overlap between the medium or large-sized business that wants to buy derivatives from JP Morgan and the retail investors who want to buy bitcoin. Are Rolls Royce (turbine manufacturer and part-time hedge fund) about to start buying forex derivatives from Binance? Seriously, seriously doubt it.
JWoolfenden 5y ago
Yeah, failing to comply with the FCA is a bold move for sure.
- belter 5y ago
  Ignoring regulations did not seem to hurt AirBnb, Uber or Facebook...
  - Kbelicius 5y ago
    None of those are regulated by FCA.
    - sillysaurusx 5y ago
      I love that there's a real-life entity equivalent to DS9's FCA. https://www.youtube.com/watch?v=ousIWGfGJ2E&ab_channel=April5%2C2063 https://www.youtube.com/watch?v=ousIWGfGJ2E&ab_channel=April... This whole time I was like, "Wow, people here are talking about the FCA the way Americans talk about the SEC. But... Where have I heard of the FCA before?" Had no idea it was a real thing. (Or that companies should be as terrified of them as they are in the show.)
  - emouryto 5y ago
    Bravo! I wonder what these 3 companies have in common?
    - belter 5y ago
      These have in common that much of their initial growth occurred by regulatory capture or ignoring existing regulations. Its ok if you are a host...Terrible if your building has been taken over by Airbnb guests. But of course they are just a platform....Not an enabler.
ghalvatzakis 5y ago
> This means that people in the UK are not allowed to use Binance's services to speculate, or bet What will happen to the people that already bought such assets?
- celticninja 5y ago
  You can still buy them and sell them. What you can't do is use leverage to bet on changes in the price as, for example, you can on https://www.plus500.co.uk/ https://www.plus500.co.uk/ Or any other number of Forex sites. These sites usually come with a warning that most users lose money. That you can lose more money than you have staked is the issue, but (I am assuming) the larger possible swings with crypto mean that both the upside and downside is even greater than with traditional fiat currency trading.
rjknight 5y ago
The distinction here is between buying and selling Bitcoin, and buying and selling contracts for difference or spread betting on Bitcoin’s price movements. The latter is more tightly regulated, as it can result in much larger gains or losses, including losses greater than the staked amount.
- shoshino 5y ago
  Spreadbetting is tax-free in the UK and the FCA banned spreadbetting on bitcoin last year. IG, CMC and CityIndex all closed out client positions and delisted all crypto pairs.
- adevx 5y ago
  "including losses greater than the staked amount" I don't think this is true. Binance will happily liquidate you well in advance of a possible negative balance.
  - _fat_santa 5y ago
    I was going to say, while technically there is the risk of loosing more than your stake, practically speaking you will be margin called long before that happens.
    - shapefrog 5y ago
      Ahh yes, I remember when people used to say that about trading in the trillion dollar a day foreign exchange markets. Then people lost 5 times their margin in the blink of an eye.
Zenst 5y ago
The crux really is the FCA raising a red flag so people who wouldn't normally think will maybe think before buying into the latest `invest in crypto` advert that have become widespread and the latest FOTM(flavour of the month). The other aspect for the FCA doing this, will be to curtail calls etc by those who get burned and go running to the FCA who can point out they told you so and it is nothing they can do as not under their remit. But yes, binance operates outside the UK (Cayman islands - which for me is always a red flag for anything finance), so the net effect upon operation will be zero. However, marketing wise - the foundations have been laid. One upshot of all this I hope is that web adverts (including youtube etc) may have to filter out these crypto investment ones and see UK residence not see any of them. Least that is my dream hope from this.
shoshino 5y ago
>> This means that people in the UK are not allowed to use Binance's services to speculate, or bet >> However, they are still allowed to use the website to purchase and sell crypto-currencies, which is not regulated These statements have since been removed from the article, because they're incorrect.
deleted 5y ago
[deleted]

egorfine 5y ago

> "BML is a separate legal entity and does not offer any products or services via the Binance.com website," said a Binance spokesman.

flixic 5y ago
BML actually stands for Binance Markets Limited, but my first thought was Binance Money Laundering.
SideburnsOfDoom 5y ago
I recall seeing that Binance has a few dozen employees total, worldwide. This limits exactly how "separate" it can be, right?
- elliekelly 5y ago
  And, in my experience, the FCA doesn’t find this sort of pedantry too convincing. Where US regulators tend to more be deferential to each entity being separate (provided you’ve jumped through a few small governance hoops) the FCA tend focus on how the entities are actually functioning rather than what the paperwork says.

dw-im-here 5y ago

This is good for bitcoin

3np 5y ago

Bloomberg article with existing discussion: https://news.ycombinator.com/item?id=27651730 https://news.ycombinator.com/item?id=27651730

deleted 5y ago

[deleted]

cblconfederate 5y ago

... to clear the room for competitors

nullc 5y ago

In the UK there are many "contract for difference" exchanges, basically bucketshops. These products are outright unlawful in the US or at least are unlawful in retail-accessible forms. My understanding is that this action is only about CFD products on binance, not normal buying/selling Bitcoin. I find it weird that the UK allows so much access to these scam products in general, but I suppose it fits in with the general accessibility of gambling.

nmca 5y ago
Could you outline why you think CFD is a scam?
- nullc 5y ago
  There are three layers to it: (1) CFD isn't an investment, it's just a side bet on the price of something else. It distorts the market for the underlying (by providing a highly uncontrolled supply of it) at the expense of creating tail risk (e.g. CFD house is fine for years and then poof everyone's money is gone). The damage from this doesn't apply to just CFD participants but potentially the market as a whole. (2) The particular mechanism of CFDs make them extremely ripe for fraud. CFD contracts are against the house so the house has an inherent conflict of interest with their customers. The CFD house can crunch the numbers, blow some money on the real market (or whatever subset contributes to their index price) to dip the price and wipe out a particular set of customers. Sometimes the index prices are based just on bid/ask -- there doesn't even need to be a real trade at the price. Manipulation is hard to detect, and the whole setup where the house is betting against you is unlike the normal situation for investments. It's even the case that CFD operators-- in the rare case where they detect a customer that appears to actually have positive returns, maybe due to insider info-- will start passing their orders through to another platform, and even riding along/front running them! (3) Specific CFD products usually have unreasonable terms such as absurd leverage where market volatility almost guarantees the customer will be wreaked. In theory some of this risk could be regulated out, but one can always construct a new product. So I think sure, you could have an honest CFD house with good controls and products with well shaped risked, and so on... and mitigate a lot of the problems but the incentives are all wrong. And worse, because much (though not all) of the CFD appeal is essentially to a gambling market, the customers actually want the highly volitional highly risky options, they want platforms that will be cheap until they implode, and so on. So in the long run, you shouldn't expect CFD operations to end well. Other products like ordinary options, or just regulated margin, let you make more complex trades without creating the bad incentives or market risks.

throaway46546 5y ago

The Ferengi Commerce Authority isn't to be trifled with.

0x0nyandesu 5y ago
Leaving the Tower of Commerce, Brunt had this to say, "The Ferengi commerce authority will not sit idly by and allow profits to be made without getting our share. Let this be a lesson to all financial markets traders."
i_am_new_here 5y ago
Ferengi = Jews ?
mkr-hn 5y ago
I didn't even know they had jurisdiction on 21st century Earth.
- mrleinad 5y ago
  Quark's trip to the past seems to have had unintended consequences.
spmurrayzzz 5y ago
I am so glad I am not the only person that thought this was a DS9 parody headline
freedomben 5y ago
Haha, exactly what I came here to say. > Brunt, FCA!
myself248 5y ago
Here I was wondering what Fiat Chrysler Automobiles was doing with Binance in the first place. Thanks for clearing that up!

igammarays 5y ago

Good. A precursor to banning crypto itself, I hope. The government SHOULD have a monopoly on certain things, like lethal force (armies), and issuance of currency, because total chaos and anarchy would happen otherwise.

folli 5y ago
I agree about the lethal force aspect, but can you elaborate on how issuing currency results in chaos and anarchy?
- Zenst 5y ago
  Anything that can impact a countries control upon their own currency has the potential to destabilise things. Now whilst cypto is another currency, it is one that is very volatile and as we have seen, anything that volatile in a currency is always never good for the majority. Also to have any impact, such crypto's would need to become more widespread and whilst in geek land we may view things as common usage, your average citizen probably at best only just aware of their existence. Indeed I'd hazard a guess that most people in any country have never held currency beyond their local offering (though the dollar sure does come close and that in some countries).
- ezekg 5y ago
  If a government has a monopoly on violence, then its citizens have no recourse to correct an evil or corrupt government. History shows time and time again that this is the case. In the case of the USA -- I don't think anybody here should want our government to have a monopoly on violence, given the USA's violent history. Trading such liberty for a sense of false security is unwise, in my opinion. The USA's founding fathers knew this.
Geee 5y ago
The idea of Bitcoin is that no one has the power to issue currency. Issuance is limited to 21 million units and all of them are created with energy. No one should have the power to issue currency.

streamofdigits 5y ago

There is a morbid satisfaction watching the formal financial system tie itself in knots as it tries to come to terms with an even worse version of itself. That large part of the financial system is glorified and useless gambling designed to extract rents by intermediaries is a matter of record [0]. Regulators have no problem with that, provided their rather arbitrary and self-servingly generous red lines are respected. So what is happening now is that new information technology (faulty and immature at best) is being used by cunning operators to tap into that ingrained behavioral pattern outside their purview. Yet what spoils the fun is the sense that (somewhere in a parallel universe) all the new digital gadgetry could somehow be used to make our economies more robust, more functional, more equitable, more sustainable,... more real and less financialised. [0] https://en.wikipedia.org/wiki/Financialization https://en.wikipedia.org/wiki/Financialization

bvaldivielso 5y ago
> That large part of the financial system is glorified and useless gambling designed to extract rents by intermediaries is a matter of record [0]. Financialization is not necessarily about useless finance taking bigger and bigger roles in the economy. Finance can be useful, and can get very complex, and so it could make sense that it became a big part of the economy. Now, I cannot say for sure that the finance industry is useful enough for it to be that big a part of the economy as it is, but I'm open to the idea (also open to the opposite idea). My point is that what you portray as a "matter of record" is a biased interpretation of what financialization is, not consensus (though may still be true).
- streamofdigits 5y ago
  The wiki entry covers some disparate topics but serves as a broad brush pointer to the massively growing gdp share of the financial industry. It is a proxy for the number of redundant financial transactions (where bits are simply shifted around in zero sum re-allocation games for which intermediaries get a cut) to actual economic transactions where something "real" happens. There is obviously a bit of subjectivity in defining "real" and "useful". There is also an intermediate gray area of so-called risk management (derivatives, securitisation etc) which can easily mutate from useful to disastrous depending on the quality of regulation. But when I look at the crypto universe (from the ICO era till today) I have no doubt what it resembles...

ohbleek 5y ago

Title is misleading. Change it.

deepvibrations 5y ago

As much as I hate the 'FUD' label often given to anything negative in the crypto space, it is disappointing that even the BBC cannot use an honest title. Binance is not 'banned' as they say- this is misleading. I am in the UK and still using it, it is only the derivatives products that have been banned.

d_theorist 5y ago
I am still using it too. The BBC article is about as clear as mud, and I doubt that the person who wrote it even understood the story.
elliekelly 5y ago
> it is only the derivatives products that have been banned. This isn’t correct. It’s any regulated asset that’s been banned. Well... has always been banned. That includes derivatives but also “cryptoassets”. The distinction comes down to whether the FCA considers the product a “security token”, “e-money”, or currency. The first two being prohibited for sale by or through Binance (or any unauthorized entity) without first obtaining the FCA’s permission as they’re regulated products. More info about the distinction here: https://www.fca.org.uk/firms/cryptoassets https://www.fca.org.uk/firms/cryptoassets

avvt4avaw 5y ago

I thought it was worth clarifying exactly what has happened here, since neither the BBC nor the FT articles make it particularly clear. The entity that the FCA has acted against is Binance Markets Limited (BML) which the parent Binance Group acquired earlier this year, in part because of its existing registration with the FCA which allowed it to carry out a limited range of regulated activities in the UK. The FCA has now placed restrictions on BML which remove its ability to carry out those regulated activities -- however BML was not actually doing any business in the UK so the effect of this is limited. The FCA also issued a consumer warning which, among other other things, reiterated that no entities in Binance Group are registered with the FCA and therefore cannot carry out regulated activity in the UK. Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it. A possibly outcome is that Binance will be a bit more circumspect about offering derivatives trading to UK retail because they want to build a more substantial UK business in the future. We saw this with Bybit a while ago, where they do not allow UK retail to use their website (although they have an exception for sophisticated investors, who can self-certify as an eligible counterparty and continue to trade on Bybit). I wouldn't be surprised to see this.

yholio 5y ago
> Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it. Why would you say that? Providing services to any British citizen over the internet will fall squarely within the regulatory domain of the UK, regardless of the website used to connect, the physical location of the server or the jurisdiction of the company.
- read_if_gay_ 5y ago
  Right, just like Facebook is certain to adhere to European privacy laws.
  - elliekelly 5y ago

emouryto 5y ago

... in the UK.

kerng 5y ago

There seem to be a lack of understand of spot vs. derivative markets here in this forum...

stevespang 5y ago

It's all because Binance had not agree to share part of the "hustle" or the "take" with the FCA. As already mentioned, The FCA has no enforceable jurisdiction over Binance, because Binance's physical and financial assets are not in the U.K.

nomoreplease 5y ago

I'm surprised $BTC's price has gone up despite this news. Actually I'm always surprised by BTC

haskellandchill 5y ago
Price is based on nonsense so I'm not surprised. With the shady exchanges and other suspicious players what does price really mean?
tomtomistaken 5y ago
Get your $BTC before exchanges are gone?

cpuguy83 5y ago

"Brunt, FCA!" I'm just picturing Brunt from ST:DS9 walking in and shutting them down.

digianarchist 5y ago

They've also ceased operations in Canada's largest province: https://www.coindesk.com/binance-pulls-out-of-ontario-following-actions-against-other-crypto-exchanges https://www.coindesk.com/binance-pulls-out-of-ontario-follow...

px43 5y ago
For those unfamiliar with the cryptocurrency space in general, Binance is the world's largest exchange because they are a global platform. They don't need to cater to western regulations. These regulations aren't cutting Binance out of western markets, they're cutting western citizens out of the largest cryptocurrency market, forcing them to use VPNs and other technologies to bypass the geo blocking. There are plenty of localized exchanges, like Coinbase, who play well with the regulators in certain geographies. This is not the market that Binance cares to cater to, and that's fine IMO. I'll never use Binance because as a US citizen, I don't feel like my deposits are safe there, mostly because US financial authorities love seizing bank accounts from companies they don't like. This is why the only crypto to USD bridge that I'll use is Coinbase. I feel like this stance is incredibly detrimental to the future of the economy of the country that I live in, but here we are. Hopefully US regulators (and Canada and UK etc) will realize the long term damage that they're doing before it's too late.