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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

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
    It’s apples and oranges. As a regulator, the FCA has a lot more teeth than the Information Commissioner. The FCA also has a much more persuasive enforcement mechanism: frozen bank accounts. It’s a lot easier for facebook to keep servers outside of the UK than it is for BML to keep money out of the UK. Any prohibited transaction with a UK citizen is now a risk not just for the potential regulatory headache it might provoke but for the chain of accounts it risks flagging to authorities.
- Communitivity 5y ago
  The FCA has no enforceable jurisdiction over Binance, because Binance's physical and financial assets are not in the U.K. - except they do have an office that could be seized, 3 Beeston Pl, London. It might be no more than a token office though. They seem to have a number of offices in places, one per country. The US one is in Fresno, CA. Their headquarters is in Malta. They sell derivatives, and they are headquartered in Malta. Who actually uses good or services from these people?
  - subroutine 5y ago
    > They sell derivatives... Who actually uses good or services from these people? Are you referring to just the BML subsidiary or Binance Group? Binance does provide its own coin (BNB), which can be used to pay fees on their exchange. That they provide access to an exchange people pay to use, seems like a service.
  - toomuchtodo 5y ago
    Do Binance officers, directors, or employees ever plan on transiting the UK or the soil of it’s allies? Becoming persona non grata with a nation state is a Big Deal.
    - RhodoGSA 5y ago
      Well, it's limited in scope as long as they don't intentionally go out of their way to circumvent the ban. UK citizens can still access binance's offering via a VPN, although it is not legal. You can't make the entire executive team non grata because your citizens are using a VPN to access a banned product. The whole thing with this is it shows how powerless nationstates have become in their ability to regulate these kind of things. Binance has the possibility of being regulated to death, but what about the decentralized derivitives exchange DxDy or Sythetix? Here in the US it is illegal as a retail investor to have more than 3x trading leverage on securities. I can get access to 10x leverage on Sythetix as a retail trader which is technically illegal, but since it's not a security it's in this weird gray area. Even if the US finally starts understanding the possibilities inherent in crypto, they wouldn't be able to stop it even if they brought the whole weight of the US nationstate ontop of it. It's decentralized. You'd have to shut down Eth, Matics, DOT, Solana, Etc. To stop these kind of exchanges. Each of these orgs might have a few people to arrest or point too, but are largely 'Decentralized' and already on the blockchain.
- mariallery 5y ago
  This might well be by law, but in practise we don't see that, which i would argue is of higher meaning.
- pessimizer 5y ago
  > LONDON, June 28 (Reuters Breakingviews) - Regulators have gotten their heads around crypto assets. The next challenge is getting their hands on the companies. Britain’s Financial Conduct Authority on Saturday said that Binance Markets, the local arm of the world’s largest crypto exchange, was “not permitted to undertake any regulated activity in the UK”. Shortly after, the company said on Twitter that the notice has “no direct impact on the services offered on Binance.com”. > How can that be? In general, the FCA can only regulate companies that are either based in Britain or that actively promote products there. A bitcoin trading platform registered elsewhere doesn’t necessarily count: according to Forbes Binance is based in the Cayman Islands. Founder Changpeng Zhao sought regulatory approval for Binance Markets, but its main services are unregulated and offered instead by the parent group. It’s not clear what he did to irk the FCA, or whether his customers will care. What’s obvious, though, is that the watchdog lacks powers to police a fast-growing part of the financial sector. (By Liam Proud) Futile UK crypto curb flags regulatory blind spot https://www.reuters.com/breakingviews/futile-uk-crypto-curb-flags-regulatory-blind-spot-2021-06-28/ https://www.reuters.com/breakingviews/futile-uk-crypto-curb-...
itsoktocry 5y ago
>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. The "impact" of this is that the regulators are beginning to take actions against the wild-west of the crypto world, regardless of how toothless each individual action is. Put aside your opinions of cryptocurrencies as a technology...there's no way sovereign governments were going to let this fly. There fireworks are just starting.
- lbriner 5y ago
  I'm not sure what they realistically do. They regulate banks but at least banks have deep enough pockets to pay the fines. What do you do when 18 and 21 year old brothers get hacked and lose $100M+? Well, you say, they wouldn't get registered because they wouldn't have what they would need to provide a fair risk to customers. Then what? People will simply run the exchanges elsewhere and the money will keep getting "lost", "stolen" or seized by the authorities.
  - davidebaldini 5y ago
    Bank deposits of legal tenders are insured by the central bank. In the Eurozone the ECB insures all personal deposits up to 100.000€. When the bank of Nicosia, Cyprus went bankrupt and the account holders could no longer withdraw, their losses were fully subsidized by the ECB, up to the 100.000€ limit. This undue confidence or trust we bestow in regulated banks comes at the expense of the wider public: when we lose our deposit due to insolvency, everybody is forced to pay for it by the monetary expansion of the ECB, which covers our loss by printing (or by digitally creating) more euro, and distributes this minted money to the affected bank, allowing withdrawals to resume. This intervention of the ECB dilutes the purchasing power of every unrelated person holding euro, regardless of their country of residence, and regardless on how meticulous they are in choosing a reliable bank. Even the CFA franc in West Africa suffers from this enforced depreciation, being pegged against the euro at a fixed ratio. Thus, the account holders gain an artificially strong confidence in the bank of their choice, regardless of whichever bank that might be, regardless of how much risk exposures the bank takes, regardless of what financial instruments it edges against, and regardless of the size of its fractional reserve compared to its liabilities. It is an insurance whose only purpose is to allow the bank to take undue risk with volatile instruments and to collectivize any resulting losses against the public, while deluding the account holders with the ancillary excuse that their deposits are safe no matter what. The alternative to having 21 year old Joe running a million-dollar crypto exchange website from a laptop in his basement is to apply fucking due diligence in choosing our counterparty, and prosecute whenever proper fraud and intentional deception take place.

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
  It’s apples and oranges. As a regulator, the FCA has a lot more teeth than the Information Commissioner. The FCA also has a much more persuasive enforcement mechanism: frozen bank accounts. It’s a lot easier for facebook to keep servers outside of the UK than it is for BML to keep money out of the UK. Any prohibited transaction with a UK citizen is now a risk not just for the potential regulatory headache it might provoke but for the chain of accounts it risks flagging to authorities.
Communitivity 5y ago
The FCA has no enforceable jurisdiction over Binance, because Binance's physical and financial assets are not in the U.K. - except they do have an office that could be seized, 3 Beeston Pl, London. It might be no more than a token office though. They seem to have a number of offices in places, one per country. The US one is in Fresno, CA. Their headquarters is in Malta. They sell derivatives, and they are headquartered in Malta. Who actually uses good or services from these people?
- subroutine 5y ago
  > They sell derivatives... Who actually uses good or services from these people? Are you referring to just the BML subsidiary or Binance Group? Binance does provide its own coin (BNB), which can be used to pay fees on their exchange. That they provide access to an exchange people pay to use, seems like a service.
- toomuchtodo 5y ago
  Do Binance officers, directors, or employees ever plan on transiting the UK or the soil of it’s allies? Becoming persona non grata with a nation state is a Big Deal.
  - RhodoGSA 5y ago
    Well, it's limited in scope as long as they don't intentionally go out of their way to circumvent the ban. UK citizens can still access binance's offering via a VPN, although it is not legal. You can't make the entire executive team non grata because your citizens are using a VPN to access a banned product. The whole thing with this is it shows how powerless nationstates have become in their ability to regulate these kind of things. Binance has the possibility of being regulated to death, but what about the decentralized derivitives exchange DxDy or Sythetix? Here in the US it is illegal as a retail investor to have more than 3x trading leverage on securities. I can get access to 10x leverage on Sythetix as a retail trader which is technically illegal, but since it's not a security it's in this weird gray area. Even if the US finally starts understanding the possibilities inherent in crypto, they wouldn't be able to stop it even if they brought the whole weight of the US nationstate ontop of it. It's decentralized. You'd have to shut down Eth, Matics, DOT, Solana, Etc. To stop these kind of exchanges. Each of these orgs might have a few people to arrest or point too, but are largely 'Decentralized' and already on the blockchain.
mariallery 5y ago
This might well be by law, but in practise we don't see that, which i would argue is of higher meaning.
pessimizer 5y ago
> LONDON, June 28 (Reuters Breakingviews) - Regulators have gotten their heads around crypto assets. The next challenge is getting their hands on the companies. Britain’s Financial Conduct Authority on Saturday said that Binance Markets, the local arm of the world’s largest crypto exchange, was “not permitted to undertake any regulated activity in the UK”. Shortly after, the company said on Twitter that the notice has “no direct impact on the services offered on Binance.com”. > How can that be? In general, the FCA can only regulate companies that are either based in Britain or that actively promote products there. A bitcoin trading platform registered elsewhere doesn’t necessarily count: according to Forbes Binance is based in the Cayman Islands. Founder Changpeng Zhao sought regulatory approval for Binance Markets, but its main services are unregulated and offered instead by the parent group. It’s not clear what he did to irk the FCA, or whether his customers will care. What’s obvious, though, is that the watchdog lacks powers to police a fast-growing part of the financial sector. (By Liam Proud) Futile UK crypto curb flags regulatory blind spot https://www.reuters.com/breakingviews/futile-uk-crypto-curb-flags-regulatory-blind-spot-2021-06-28/ https://www.reuters.com/breakingviews/futile-uk-crypto-curb-...

itsoktocry 5y ago

>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. The "impact" of this is that the regulators are beginning to take actions against the wild-west of the crypto world, regardless of how toothless each individual action is. Put aside your opinions of cryptocurrencies as a technology...there's no way sovereign governments were going to let this fly. There fireworks are just starting.

lbriner 5y ago
I'm not sure what they realistically do. They regulate banks but at least banks have deep enough pockets to pay the fines. What do you do when 18 and 21 year old brothers get hacked and lose $100M+? Well, you say, they wouldn't get registered because they wouldn't have what they would need to provide a fair risk to customers. Then what? People will simply run the exchanges elsewhere and the money will keep getting "lost", "stolen" or seized by the authorities.
- davidebaldini 5y ago
  Bank deposits of legal tenders are insured by the central bank. In the Eurozone the ECB insures all personal deposits up to 100.000€. When the bank of Nicosia, Cyprus went bankrupt and the account holders could no longer withdraw, their losses were fully subsidized by the ECB, up to the 100.000€ limit. This undue confidence or trust we bestow in regulated banks comes at the expense of the wider public: when we lose our deposit due to insolvency, everybody is forced to pay for it by the monetary expansion of the ECB, which covers our loss by printing (or by digitally creating) more euro, and distributes this minted money to the affected bank, allowing withdrawals to resume. This intervention of the ECB dilutes the purchasing power of every unrelated person holding euro, regardless of their country of residence, and regardless on how meticulous they are in choosing a reliable bank. Even the CFA franc in West Africa suffers from this enforced depreciation, being pegged against the euro at a fixed ratio. Thus, the account holders gain an artificially strong confidence in the bank of their choice, regardless of whichever bank that might be, regardless of how much risk exposures the bank takes, regardless of what financial instruments it edges against, and regardless of the size of its fractional reserve compared to its liabilities. It is an insurance whose only purpose is to allow the bank to take undue risk with volatile instruments and to collectivize any resulting losses against the public, while deluding the account holders with the ancillary excuse that their deposits are safe no matter what. The alternative to having 21 year old Joe running a million-dollar crypto exchange website from a laptop in his basement is to apply fucking due diligence in choosing our counterparty, and prosecute whenever proper fraud and intentional deception take place.