Binance has been blocked from marketing itself to British customers by UK regulators as part of the latest crackdown on the crypto-industry.
The world’s largest cryptocurrency exchange, that has often clashed against the Financial Conduct Authority (FCA), had tried to navigate through new industry standards, which came into effect on Sunday, by teaming up a locally-regulated firm.
However, on Tuesday the FCA said Rebuildingsociety.com, Binance’s Leeds-based partner, had been added to its list of regulated companies forbidden from promoting crypto services in the UK.
Binance has suffered a new setback in its plans to expand into the UK market. The FCA ordered Binance to cease all regulated activities in the UK in 2021 after the exchange failed to answer basic questions and claimed it had no headquarters.
Recently, the agency was given authority to supervise certain aspects of the crypto industry including compliance with anti money laundering rules and advertising standard.
According to the new rules, promoting cryptocurrency assets to UK clients without their consent can result in a fine of up to £20,000 and even two years imprisonment. These rules apply to any company, regardless of whether it is based in the UK.
The FCA issued over 150 warnings in the three days following the implementation of the new rules to companies who are not registered or authorised with the regulator. This includes exchanges like Huobi and KuCoin. Last month, another cryptocurrency exchange, Bybit announced that it would be closing down in the UK due to its inability to comply with new rules.
Lisa Lee Lewis is a lawyer at Addleshaw-Goddard who specialises in digital assets. She said that the FCA had set a clear marker for crypto firms on how to avoid crystallising risk and intervene early enough to stop harm.
Binance said last week its partnership with Rebuildingsociety.com meant it would comply with the FCA rules, allowing it to offer UK users services such as crypto trading, credit cards, non-fungible tokens and loans.
The FCA said in an update on its website on Tuesday that Rebuildingsociety.com had until the end of Wednesday to withdraw all of its crypto promotions. It is “disappointing we have had a restriction imposed on us, and we are working to remove it,” Rebuildingsociety.com said, adding that it intended to appeal against the decision.
Binance stated that it has “invested a tremendous amount of time and resource” to ensure compliance with the FCA requirements. However, it declined to confirm if it would be seeking a new partner or stop promotions in the UK.