New regulations in the UK cited as reason for Binance decision to stop accepting new customers in United Kingdom
Crypto exchange Binance confirms it has stopped accepting new customers in the United Kingdom because of new regulations from the Financial Conduct Authority (FCA).
Binance announced that the “UK Financial Promotions Regime for qualifying cryptoassets came into effect on 8 October 2023”, which means “from Monday 16 October 2023 at 5pm UK time, Binance will stop accepting new UK users.”
Binance is currently facing a number of challenges. In June it became embroiled in a legal tussle with the US financial regulator, and a number of financial institutions have also stopped working (in certain regions) with the platform.
On Monday Binance said it will stop accepting new customers in the United Kingdom, in compliance with new regulation restricting promotions from overseas digital asset firms in the country.
The UK’s clampdown amid increased scrutiny of cryptocurrency platforms in a number of countries, following a string of high-profile collapses in 2022 that triggered worries about how these firms use and store customer deposits in a largely unregulated industry.
Last week the FCA had announced it was stopping peer-to-peer platform rebuildingsociety.com from approving financial promotions for Binance and other crypto asset firms – days after Binance announced it had partnered with the company.
“On 10 October 2023, we imposed restrictions on rebuildingsociety.com Ltd to restrict it from approving cryptoasset financial promotions,” the FCA announced last week.
The FCA in its decision notice had said unregistered cryptoasset firms must not promote cryptoassets to UK consumers unless they have an authorised company to approve the promotions.
“Rebuildingsociety.com Ltd has the right to make representations to the FCA regarding the restrictions,” the UK financial regulator stated last week. “They also have the right to refer the matter to the Upper Tribunal.”
“On 10 October, the FCA imposed legally-binding requirements on REBS, which meant that REBS was no longer able to approve financial promotions and with effect from 5pm on 11 October 2023 REBS had to withdraw any existing approvals of financial promotions on behalf of any cryptoasset businesses (including Binance),” Binance said in its blog post.
Binance said it is currently looking for a new FCA authorised approver. However, there will be some temporary restrictions coming into effect on its UK Platform and latest version of its mobile app.
“From Monday 16 October 2023 at 5pm UK time, Binance will stop accepting new UK users,” the platform confirmed.
It added that existing UK users will retain the current services available (providing they have completed their Investor Declaration and Appropriateness Test) but any new products and services will not be made available during this interim period.
In March Binance had experienced a mini bank run after it was charged by the US Commodity Futures Trading Commission (CFTC), which sued Binance along with its CEO and former top compliance executive, alleging that they were operating an “illegal” exchange and a “sham” compliance program.
Binance however denied it does business in the US, and said it made “significant investment” in controls that specifically ban customers with US identity documents or mobile phone numbers, for example.
Then in June, the US Securities and Exchange Commission (SEC) filed lawsuits against both Coinbase and Binance, as well as against Binance’s founder and CEO Changpeng Zhao.
That SEC lawsuit came after it was reported that a senior Binance executive allegedly had primary control over five bank accounts belonging to the cryptocurrency firm’s supposedly independent US affiliate.
The SEC had listed 13 charges against Binance, Zhao and the operator of its purportedly independent US Exchange.
But Binance pushed back against the US financial regulator, and in August filed for a protective court order against the SEC.
Last month Binance’s global head of product, Mayur Kamat, resigned, after a string of other executive exits and job cuts at the cryptocurrency exchange.
Other executive departures at Binance includes Chief Strategy Officer Patrick Hillmann and General Counsel Hon Ng.
The firm also reportedly laid off approximately 1,000 people in July.