Clever wordplay confuses the cryptoverse
The announcement in the last 48 hours from mainstream media outlets that Binance has been banned from operating in the UK has shaken the blockchain and crypto space to its core. Although, it has become apparent that reading between the lines of most major news coverage is vital as we look to pick apart what is really going on. Has the world’s leading crypto exchange by reported turnover just been kicked out of one of its biggest markets? In short, No.
Setting the scene
To add some further clarity, it’s important to know that these FCA regulations came out in January 2021. In that space of time, only five companies have been able to gain approval. Two Gemini entities, Archax, Ziglu, Digivault, the custody arm of Diginex and, Mode Global Holdings. Notably, organizations such as Coinbase are not included here.
Binance Markets Ltd, an affiliate of Binance was told by the Financial Conduct Authority it has until the 30th of June 2021 to confirm it has removed all advertising and financial promotions. The exchange must also make clear on its website, social media channels, and all other communication avenues that it’s no longer permitted to operate in the U.K. In essence, Binance Markets won’t be able to resume U.K. operations without prior written consent. While the target of the restrictions is a separate legal entity from Binance. The FCA declaration specifies that the notice must be put on Binance.com and communication channels including the Binance mobile and desktop applications.
Binance Markets “does not offer any products or services via the Binance.com website,” the global crypto exchange said Sunday via Twitter. “The Binance Group acquired BML in May 2020 and has not yet launched its U.K. business or used its FCA regulatory permissions.“
So are they banned?
At the time of writing because BML is a separate entity to Binance the FCA UK notice does not directly impact any services provided through Binance.com. Although reading the headlines, this would not be at all apparent. The FCA instructed Binance Markets to remove or give instructions for the removal of, any advertising and financial promotions it currently has live. Of which it has none. It also told the firm to secure and preserve all records relating to U.K. consumers, so they “can be provided to the FCA, or to a person named by the FCA, promptly on its request,” according to the statement. Which is pretty standard practice to keep users and the platform safe.
The bigger picture
Now, while this recent media outburst may not be entirely accurate there is certainly a regulatory narrative sweeping the space right now. As a writer with close ties to the UK, I can state that I have friends that have received emails from their banks stating that they are not allowed to deposit money to crypto exchanges. Globally, In Canada, the OSC regulator has brought its first enforcement case against a Seychelles-based firm for failing to heed the regulator’s warning to get registered. Whilst Japan’s top financial regulator, the Financial Services Agency (FSA), issued a warning notice to Binance Holdings Ltd. and CEO Changpeng Zhao.
What about prices and activity?
The move had almost zero effect on crypto prices. Binance Coin (BNB), the native token of Binance that can be used to trade crypto and pay fees on Binance, is up 2.8% in the past 24 hours, according to CoinGecko. Crypto maximalists often see regulatory action as a sign that the market is maturing and that it may actually pull in more investors.
Dapp activity on Binance Smart Chain also appears unaffected at the time of writing. In fact, in the last 24 hours, many BSC DeFi apps have seen surges in user activity. Notably, PancakeSwap, PantherSwap, and Pancake Bunny. Of course, this could be a rush of users to drain funds from Binance in the expectation of bad news.
Regulators can be seen as the big bad wolf sometimes. It’s important to remember they are operating for users’ safety and peace of mind when engaging with cryptocurrency. As much as some may fear the word regulator – we would do well to appreciate that in the end, they will help shape a much more inclusive, fair, and transparent decentralized world for us to operate in.