Binance, the world’s #1 crypto exchange by trading volume, is facing significant obstacles in the United Kingdom (UK), where it is trying to comply with the new regulations imposed by the Financial Conduct Authority (FCA) regarding digital assets.
In particular, the exchange is unable to find an FCA authorized partner that can accompany it in reestablishing its presence in the UK.
Within the country, starting from October 2023, Binance had to suspend the processing of new registration requests, precisely in an attempt to comply with current regulations.
Let’s see all the details below.
Binance Exchange and the difficulty in finding FCA authorized partners in the UK
According to a Bloomberg report, cryptocurrency exchange Binance is struggling to find a partner willing to accompany it in re-entering the UK market.
Binance in October 2023 halted registrations of new users in the country, in response to the introduction of the new financial promotion regime regarding crypto assets, which prevents cryptocurrency platforms from operating in the United Kingdom without being accompanied by companies approved by the Financial Conduct Authority (FCA).
In the last few months, the exchange has been rejected by at least 3 companies that hold this “special permission”: among them we also find “Rebuildingsociety.com”, whose partnership with Binance was terminated by the FCA itself.
The regulatory body is playing a key role in this debate as it tends to push away companies seeking an agreement with the crypto exchange, citing regulatory concerns and effectively blocking the onboarding of new users and the promotion of new financial services.
Contrary to how the situation is described, however, in a recent statement Binance has denied having faced difficulties in finding a new partner:
“It is not accurate to say that we have been rejected by the approvers of section 21 in the United Kingdom. We continue to have productive conversations with potential approvers and we are confident that we will soon be able to provide a positive update.”
In May of last year, the exchange had canceled its registration with the FC through its subsidiary Binance Markets Limited, following the decision to revoke regulatory authorizations for services that had never been offered in the UK.
As a result, Binance is now without partners who can accompany it in providing services in the country, and without support in this regulatory framework.
These challenges may have been amplified after the legal issues faced by Changpeng Zhao and his company abroad, specifically in the United States where they were fined $4.4 billion by the Department of Justice.
In June, Binance and Zhao himself were sued by the SEC on 13 charges, including responsibility for unauthorized securities sales, implementation of wash trading practices, violation of anti-money laundering regulations, and much more.
It seems as if Binance’s undisputed domain, which until a few months ago could count on a solid presence in almost every country in the world, is shrinking more and more as new international regulations on cryptocurrencies are being promoted that disregard the presence of foreign private operators.
Other obstacles for Binance
The news of the difficulty that the Binance exchange is facing in finding FCA authorized partners in the UK represents only the tip of the iceberg of a broader regulatory problem, which involves the entire Europe.
The entry into force of MiCA (Markets in Crypto Asset) in the continent may have partially halted the expansion plans that the crypto exchange company had set for itself.
In particular, it has emerged from a recent MoneyLIVE conference in Amsterdam that the new MiCA regulation will mitigate some of the risks associated with the supervision of entities providing financial services through digital currencies.
Ivan Keller, member of the Securities Markets Unit of the Directorate-General for Financial Stability, Financial Services and Capital Markets Union (DG FISMA), hinted on that occasion that controls on exchanges like Binance will be stricter in the future and will focus on protecting the end consumer.
In detail, the leading platform for trading Bitcoin and other cryptocurrencies, in addition to the obstacles encountered in the UK territory, also faces regulatory difficulties in Italy and Germany.
In the Mediterranean peninsula, the exchange has recently had problems with its partners for fiat on-ramp and off-ramp transactions, with EURO deposits being blocked on the platform for a few weeks (then restored), as well as payments with their debit card currently being out of service for Italian customers.
In Germany, Binance had tried in June of last year to obtain the operating license from BaFin, which is the regulatory authority that oversees the German markets.
The regulatory requirements necessary to pass the BaFin test were too high even for Binance, which failed in its attempt to obtain the license for crypto custody and expand its services.
After all these setbacks, the cryptocurrency exchange could consider an exit from Europe, which has already been rumored in August 2023, following the company’s withdrawal from the Cyprus markets as a move to comply with MiCA.
After surviving the turbulence in the crypto landscape of 2022, which involved and sank former successful entities in the crypto world like Celsius, FTX, Terra/Luna, and 3AC, the exchange now finds itself facing a series of regulatory pressures from different directions, and will have to choose whether to engage in dialogue with regulators or directly seek fortune elsewhere.