Leading crypto exchange Binance announced in a blog update on Monday that it has halted onboarding new UK users following an imposed legally binding requirement by the Financial Conduct Authority (FCA) on its financial promoter, Rebuildingsociety.com Ltd. (REBS). The temporary ban will take effect on October 16 and span until Binance gets an FCA-authorized approver for its financial promotions in the country.
Binance also confirmed that the halt won’t affect its existing users, provided they complete their investor declaration and appropriateness test. However, the leading exchange stated that the already-onboarded users would not have access to new products and services during the halt period.
The new user onboarding halt was mandated following the recent UK financial promotion regime that kicked off on October 8, 2023. Under the new policy, foreign crypto firms like Binance can only conduct business in the country by registering with a firm approved by the FCA. A deviation from this rule attracted punishments like being placed on a public warning list, fines, and even jail time.
Binance Affected by REBS Ban
The FCA announced on October 10 that it had terminated its contract with REBS to stand as an authorized financial promoter and directed the peer-to-peer lending platform to retract existing approvals on October 11. REBS was Binance’s partner and approved the exchange communications with its UK users.
So, new users must wait until Binance gets a new FCA-approved firm to authorize its dealings with UK clients. Binance is also under pressure to quickly wrap up a new partnership and regain the UK market, one of its biggest outside the United States.
A Binance spokesperson confirmed that the exchange has already told FCA it is in a progressive discussion with an approved financial promoter and hopes to get the agreement over the line soonest.
“We are in active discussions with another suitable FCA-authorized firm to approve our financial promotions as soon as possible,” the spokesman stated.
A New Regulatory Regime in the UK
The new financial promotion regime mandates crypto firms to meet stricter standards in the UK to improve user protection. Among others, crypto exchanges would have to place clear disclaimers on their sites, warning users of the risks of gaining exposure to digital assets.
The new regime also gives investors a 24-hour cooling window to carefully consider their decision to invest in cryptocurrencies. It also prevents existing users from referring friends or loved ones to buy Bitcoin and other digital assets.
The FCA has already placed exchanges like Huobi and KuCoin on its warning list just a few days after launching the new regime. The regulator communicated clearly about the crypto firms, stating they “may be promoting financial services or products without our permission.”
