With growing scrutiny of the cryptocurrency sector throughout the world, a an increasing number of crypto asset firms are scrapping plans and efforts to get registered with the British financial regulator.
Binance, one of the world’s biggest crypto exchanges, was banned by the Financial Conduct Authority (FCA) on Friday and barred from undertaking any regulated activity in the country even as financial regulators throughout the world are increasing scanning of the crypto sector.
According to an FCA spokesperson, the number of crypto firms that have decided not to get registered with the regulator had increased by a quarter in less than a month, showed data on registrations. Binance withdrew its application in mid-May, the spokesperson said but did not provide any details.
Since January this year, companies dealing in cryptocurrencies have had to get registered, prior to doing any business, with the FCA– the regulator that is tasked with the duty of overseeing compliance with laws aimed to stop money laundering and terrorist financing.
Registration has been given by to only six companies even as the FCA is assessing the applications of dozens more firms in this sector and they have not yet been deemed to be “fit and proper”. The spokesperson said that about 64 have withdrawn their applications where as the number was 51 in early June.
While not making a comment on the FCA order, a Binance spokesperson said that the company worked closely with regulators and law enforcement “to further the security and sustainability in the industry while providing the best services and protection to our users”.
The potential of cryptocurrencies such as bitcoin to be used for money laundering and other illegal activities while also potentially putting consumers at risk are the major concerns for regulators across the world.
Binance is one of the most significant players in the crypto world and is run by Canadian Changpeng Zhao. A range of services is offered by the company that range from offering customers digital token trading to derivatives, as well as emerging technology such as tokenised versions of stocks.
Yet its regulatory structure is opaque.
The company spokesperson did not comment on the location of its holding company and described the company to be “decentralised”. In recent months, regulators across the world have targeted Binance.
The operations of Binance were declared as illegal in Japan by the country’s regulator on June 25 in a notice posted on Japan’s Financial Services Agency website.
Information about the Binance’s business was being sought by officials from the United States Justice Department and Internal Revenue Service who probe money laundering and tax offences from people with such knowledge, claimed a report published last month by Bloomberg.
“The FCA is aligning with other major regulators, notably in the U.S. and Asia,” Alpay Soytürk, compliance head at Spectrum Markets, a securitised derivatives trading venue, said.
(Adapted from Reuters.com)