As Binance encounters regulatory battles, we put the brand under the spotlight to see what the future holds for world’s largest cryptocurrency exchange.
Binance Restricted: Does it Affect You?
During the crypto bull run of 2020 and into 2021, Binance has continued its growth as the world’s largest cryptocurrency exchange, battling with the likes of Coinbase and Crypto.com for its share of he burgeoning digital asset market. The firm was set to launch its own digital asset marketplace in the UK, but like several competitors, it withdrew its application with the FCA in May 2021, due to sub-standard anti-money laundering procedures. Jump forward to June 30 2020, and Britain’s Financial Conduct Authority, announced that Binance Markets Limited “Is not permitted to undertake any regulated activity in the U.K and from June 30, Binance must notify U.K. users of the FCA’s restrictions in a prominent place on its website and apps.”
While this may have sent the crypto world reeling, in reality it wasn’t unexpected. Furthermore, aside from some banking issues for some UK customers, the ruling isn’t likely to affect users on Binance when it comes to trading and staking.
Fundamentally, although Binance Markets Limited is banned from offering regulated services in the UK, non-registered companies can still offer services to British users (e.g. you can still buy and sell on Binance exchange and use its services such as staking). This was highlighted in a statement to CNBC, in which a Binance representative, noted: “The FCA U.K. notice has no direct impact on the services provided on Binance.com … Our relationship with our users has not changed.”
Are UK banks blocking Binance deposits?
While you can still use Binance if you’re in the UK and other impacted locations, there are issues to be aware of, particularly if you looking to make fiat deposits.
Fundamentally, some banks in the United Kingdom are cracking down on Binance crypto exchange payments, including HSBC, NatWest and Barclays. HSBC announced in July (via Twitter) that the firm had suspended card payments to Binance, citing ‘‘Concerns about possible risks” to customers.
HSBC has seemingly positioned itself as a leading anti-crypto bank, intent on blocking its uses from investing in crypto and crypto-related products. The bank has previously blacklisted the stock of business intelligence firm MicroStrategy on its online trading platform as part of its clampdown on users transacting with cryptocurrencies.
If you want to fund your Binance account with fit currency, you may want to check with your bank or provider; alternatively you can try and make a deposit and see if it’s processed. But to reiterate the point – it’s completely legal to fund your Binance account and use the available services.
VISA & Mastercard show support for Binance
While some banks are making life hard when it comes to fiat deposits on Binance, the two biggest credit card companies in the world, Visa and Mastercard, have thrown their support behind Binance’s crypto exchange. Both brands enable intermediary payments companies (e.g. banks and wallets) to offer Binance deposits to customers, as Visa revealed to the Financial Times recently: “We’re aware of the recent FCA statement regarding Binance… and are in dialogue with Binance to monitor developments….” Mastercard made similarly bullish comments about their relationship with Binance.com: “We continue to monitor this situation, including how the exchanges fulfil their regulatory requirements.”
Fiat withdrawals blocked for UK customers?
While many banks and wallets are still letting UK customers make deposits into Binance, backed by the support of VISA and Mastercard – fiat withdrawals on Binance are not currently available (August 2021). The Financial News, London, reported that Binance started blocking GPB withdrawals for UK users, on July 13 2021. Binance emailed customers, citing problems with the Faster Payments Network (FPN). The problem reportedly stems from the global payment vendor, Clear Junction, stopping its facilitation of GBP and EUR transactions for Binance.
Binance snapshot for UK users*
- Fiat deposits blocked by some banks
- Withdrawals disabled
- Some banks/wallets supporting deposits
- Normal trading & staking enabled
- Crypto transfers enabled
*Updated August 2021
According to Binance, the company is working on a solution to enable fiat withdrawals for British customers and other affected jurisdictions, so it’s hoped the situation will be resolved in the coming weeks or months. In the meantime, you can still use Binance to buy, sell and trade and stake crypto, like normal on Binance.
When it comes to withdrawing, you may be limited to holding your cryptocurrency or fiat funds in Binance until withdrawal functionality is restored.
The other option, if you need to liquidate funds into fiat currency and withdraw it, is to transfer your assets to another crypto exchange, such as Coinbase or Crypto.com
Binance Aims to Evolve to Regulate
Binance has found itself under immense pressure in recent weeks, but in many ways the spotlight placed on the firm, could be great news for Binance and holistic crypto industry. In effect, this is a do or die moment for the crypto exchange – and there’s every indication that Binance’s founder and CEO Changpeng Zhao (CZ), is looking to revolutionise the firm’s regulatory efficacy, and give the company first-class regulatory status.
Binance CEO to step down for regulatory boost?
One intriguing bit of intriguing speculation, in the face of Binance’s regulatory problems, is the potential for CZ to step down from his role of CEO, to bring in a more experience regulatory expert. Given the fact the a host of countries are on Binance’s back, on the issue of regulation (including UK Japan, Cayman Islands, Hong Kong, Thailand, Germany, and Lithuania), Zhao has been swift to state his intention to enhance the crypto exchange’s relationship with regulators.
Commenting on Twitter about the speculation, CZ noted that he’s open to the idea of stepping-down if a suitable candidate materialises: “CEO contingency planning starts in day 0, same as any other role…. I feel CEOs should not stay for more than 10 years, ideally around 5 years. We live in a dynamic world. We need new thinking. Presidents only serve for 4 years. We are always hiring for CEOs.”
In reality, CZ’s comment just illustrates the flexibility he has when it comes to driving the brand towards financial institution status – and he was keen to highlight that his commitment to Binance is stronger than ever: “There are no immediate plans to replace me as CEO…. I don’t need to be CEO, and I am not leaving. I will always find ways to contribute to the community behind the logo tattooed to my forearm.”
Binance to relocate & decentralise
One of the strategies that we can definitely expect to see in the near future, is regional Binance offices, which will offset the exchange’s current decentralised format. Binance wants to be licensed everywhere, and ensure it maintains a competitive edge with the likes of Crypto.com and Coinbase.
Binance rapidly evolving to gain credibility
Binance is already making fast moves to show the world that it’s serious about its role as a leading and regulated financial institution, in the emerging digital economy. One clear example, is the fact that Binance is closing down its crypto derivatives trading markets, across the globe. The latest location to feel the heat, is Hong Kong, following on the back of Germany, Italy, Netherlands and UK. Binance is giving users 90 days from instruction of closing crypto futures and options markets, to close open positions. Binance started that they’re the first big crypto exchange to tackle derivative crypto trading in Hong Kong: “Binance will be the first major cryptocurrency and digital assets exchange to proactively restrict access to derivatives products to Hong Kong users…”
Binance Issues Look Progressive for Crypto
Binance has established itself as the world’s biggest cryptocurrency exchange, since its launch in 2017, and its regulatory battles look set to fuel its evolution into a regulated financial institution. While the romantic notion that crypto can be fully decentralised from the regulated financial system, increasingly looks a pipe dream, the push towards a more regulated cryptocurrency industry, looks exciting for the mainstream penetration and next phase of digital asset evolution.
If you’re based in a country such as the UK which is currently making deposits via some banks unviable, then you can still use Binance with vendors who continue to support the crypto exchange. While fiat deposits remained blocked for UK customers and some other jurisdictions in August 2021, you can still use the site to trade and stake, as normal. You can also move your crypto assets to other exchanges, if you want to liquidate into fiat and withdraw.
Overall, Binance’s battles, looks to be just what the crypto world needs to gain more credibility, user numbers and use cases – a scenario that could be excellent news for digital asset investors in 2021 and beyond. Binance is pivoting from a tech startup, into a financial services company, so expect full functionality for restricted users, to be back soon.