On Monday, October 16, the world’s largest crypto exchange by daily trading volume, Binance, revealed plans to suspend the onboarding of new clients in the UK. In a blog post, the Binance team stated that the decision to suspend registration for the new user emanated from the legal action facing Rebuildingsociety.com Ltd (REBS), its UK partner.
In an October 10 update, the UK Financial Conduct Authority (FCA) enforced a legally binding requirement on REBS. According to the FCA, the REBS was restricted from engaging in any Binance products and services advertisements.
Binance Suspends Operations in UK
The restrictive approach has forced Binance to seek the FCA-authorized approver to restore its financial promotion in the UK. The controversial crypto exchange stated the FCA regulatory action obliges Binance to suspend its UK operation temporarily.
However, the suspension will only affect new users, while the existing customers must undergo a comprehensive investor declaration and appropriateness examination. The Binance team admitted the indefinite suspension of operation will have minimal impact on the existing customers.
However, the crypto exchange regretted that Binance UK users will be restricted from accessing new products and services until the FCA responds to Binance. An announcement conveyed by the Binance spokesperson revealed that the crypto exchange has been holding dialogues with the FCA concerning the reapproval of its financial promotion. The spokesperson anticipates the active discussion will reach a solid solution quickly.
In the meantime, users can only access existing products such as Binance Academy, Binance Feeds, gift cards, and referral bonuses. The FCA regulatory action aligns with the new provision under the marketing requirements.
UK Imposes New Rules to Safeguard the Consumers
Earlier this month, the FCA had enforced new marketing rules that required the firms to advertise their products to UK users clearly and honestly. Under the new marketing regime, the crypto firms must outline the risk associated with a digital asset.
The new rules allowed the UK-based firms fully registered by the FCA to promote products for their international partners. The new regulations were effective on October 8 obliged foreign investment to register with the FCA to restore their operation in the UK.
The regulators mention that non-compliance with the marketing rules could lead to potential action such as hefty court fines, imprisonment, and related criminal charges. The FCA confirmed that based on the complexity of the marketing requirement, the regulators might delay approving the request from some of the companies.
The expected approval might extend to January next year. The regulation aimed to shield the customers from exploitative business activities. The restriction forced Binance to seek a strategic partnership with the REBS since exchange was not registered with FCA.
Under the partnership agreement, the REBS was tasked to support marketing Binance spot trading non-fungible tokens, among other services, to UK users.
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