Binance, the world’s largest cryptocurrency exchange, has halted the acceptance of new customers in the UK after regulatory authorities cracked down on companies targeting digital assets to British consumers. The company announced the policy late on Monday, less than an hour before it was due to take effect, after the Financial Conduct Authority (FCA) blocked Binance’s plan to comply with new industry standards last week.
This move is a setback for Binance’s ambitions to expand in the UK market, following the implementation of new rules earlier this month. These standards are among the strictest in the world, as the regulatory authority seeks to enhance consumer protection following last year’s collapse in digital asset prices and the implosion of companies like FTX.
Only authorized firms are allowed to advertise cryptocurrencies in the United Kingdom. Non-compliance can result in unlimited fines and possibly a two-year prison sentence. The rules apply to all companies, regardless of whether they are based in the UK or abroad. In the first week of the new regulations, the FCA issued over 150 warnings about advertising campaigns by unauthorized crypto groups.
Binance, which claims to have no headquarters, violated FCA rules in 2021 and was instructed to cease all regulated activities in the UK after failing to respond to fundamental questions. The exchange had partnered with Rebuildingsociety.com, but last week the FCA ruled that the Leeds-based company was prohibited from promoting crypto services in the UK, preventing Binance from legally marketing itself in Britain.
“We have informed the FCA that we are in active discussions with another suitable FCA authorized firm to have our financial advertising approved as soon as possible,” said Binance.
Existing Binance customers can continue to use the services as usual, but no new products and services will be available in the meantime, the company added.
This development is the latest in a series of setbacks for Binance this year. It has faced lawsuits from the two major US market regulators, the Securities and Exchange Commission and the Commodity Futures Trading Commission, and has lost its dominant control over the crypto market. According to CCData, Binance’s share of the crypto market fell to 34% in September, marking the seventh consecutive month of declines since the exchange controlled almost 57% of the market in February.
Despite the exchange’s turbulent history with UK regulatory authorities, it promised earlier this year to submit a new proposal for regulation in this jurisdiction. At the Financial Times’ Crypto and Digital Assets Summit this summer, Patrick Hillman, then Chief Strategy Officer of the company, said Binance would “do whatever it possibly can” to be regulated in the UK. Since then, the company has refused to confirm whether it has reapplied for FCA regulation of its crypto operations.
