FCA clips wings of cryptocurrency exchange

One of the world's largest cryptocurrency exchanges has been told it is not welcome in the United Kingdom.

Britain's financial regulator, the Financial Conduct Authority, told Binance Markets Ltd, Binance's only regulated UK entity, it must cease all "regulated activity "immediately.

The regulator, which is known as the FCA, also issued a warning to potential investors, reminding them they should "always be wary if …contacted out of the blue, pressured to invest quickly, or promised returns that sound too good to be true".

The authority said the company "must not, without the prior written consent of the FCA, carry out any regulated activities" and must post a warning on its website to that effect.

The Guardian newspaper said the trading of cryptocurrencies is not directly regulated in the UK but services, such as trading in derivatives, is. Effectively, that means companies can sell cryptocurrency but cannot facilitate people speculating, or gambling, on whether currencies will go up or down in value.

The FCA has also been asking companies that offer cryptocurrency-related services to demonstrate they are complying with rules preventing money laundering.

The Guardian said the FCA did not explain why it ordered Binance to stop regulated activities, but noted the authority had previously said it was stepping up oversight in light of the currencies' growing popularity. The paper noted that 2.3 million Britons now have some cryptocurrency, despite warnings about potential pitfalls that included Andrew Bailey, the governor of the Bank of England, saying people who buy cryptocurrency should be prepared to lose all their money.

Binance, which is based in the Cayman Islands, bought an FCA-regulated entity last year in order to offer cryptocurrency trading services in the UK, Sky News said.

But it noted that the company says it has not yet started offering products in the UK that require regulatory permission, so the FCA prohibition will have little impact.

A spokesperson told the Reuters news service: "We take a collaborative approach in working with regulators and we take our compliance obligations very seriously. We are actively keeping abreast of changing policies, rules, and laws in this new space."

Sky News said lawmakers around the world have been struggling with how best to regulate cryptocurrencies because they are not overseen by central banks. Sky noted that Japan took similar action on Friday to limit Binance's activities there.

The Bloomberg news agency said the Securities and Exchange Commission in the United States has been investigating Binance Holdings, another subsidiary of the company, to find out whether money-laundering and taxation rules are being followed.

Additionally, the BBC said accusations from the Ontario Securities Commission that the company may not be following its regulations led Binance to announce on Saturday it was pulling out of the Canadian province of Ontario.