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FCA Issues Consumer Warning On Binance Group

FCA Issues Consumer Warning On Binance Group

The U.K. Financial Conduct Authority (FCA) issued a consumer warning memo identifying Binance Markets Limited, and Binance Group, its parent organization, as a firm prohibited from undertaking any regulated activity within the U.K.

The pronouncement follows imposition requirements set by the FCA, disabling Binance and any of its subsidiaries and related companies from undertaking regulated activities without prior written notice of consent from the FCA.

According to the FCA's warning, it appears that Binance Group is offering UK customers a range of regulated financial products and investment instruments through Binance.com.

The FCA says that the Binance Group and its related firms have not acquired "any form of UK authorisation, registration or licence to conduct regulated activity [in the UK]" and would thus be subject to the ban. The FCA Warns:

"Be wary of adverts online and on social media promising high returns on investments in cryptoasset or cryptoasset-related products."

The FCA further explained that a majority of firms offering cryptoassets have not undergone regulatory oversight from the agency:

"Most firms advertising and selling investments in cryptoassets are not authorised by the FCA. This means that if you invest in certain cryptoassets you will not have access to the Financial Ombudsman Service or the Financial Services Compensation Scheme if things go wrong." 

To date, the FCA acts as a regulatory agency overseeing cryptoasset derivatives such as futures contracts, contracts for difference, options, as well as certain cryptoassets that the FCA categorizes as securities, including security tokens and e-money. However, the agency has deferred from the regulation of Bitcoin, Ethereum, Litecoin, and other similar or equivalent mediums of exchange.

According to the FCA guidelines for cryptoassets, the agency:

"[...] sometimes refer to them as exchange tokens and they do not provide the types of rights or access provided by security or utility tokens, but are used as a means of exchange or for investment." 

The FCA has also advised UK consumers to practice DYOR (do your own research), saying that the Companies House is available as a resource to check if a certain firm is registered as a UK company. Finally, the FCA issued a warning for all consumers of a basic investment etiquette:

"Always be wary if you are contacted out of the blue, pressured to invest quickly or promised returns that sound too good to be true." 

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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