Binance poses a significant risk for crypto savers – Bankless Times – Bankless Times

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On Wednesday, the UK’s Financial Conduct Authority (or FCA) deemed Binance — the world’s largest crypto exchange — “incapable of being supervised”.

This is after Binance failed to answer the regulator’s crucial questions on their lack of protecting crypto investors.

For FCA to no longer oversee Binance means that crypto investors are now at risk — especially when buying their complex and high-risk financial products.

According to FCA, supervising Binance effectively is impossible. This poses a “significant risk” to consumers of their products, which they offer outside the regulatory umbrella.

Navigating crypto market without FCA’s oversight

FCA branding of Binance as impossible to manage has come at a time when the world is experiencing an uptick in Bitcoin prices — from a low of $30K in July to $50K in August.

The recovery of Bitcoin will certainly attract many retail savers — never mind British investors, too. But with FCA out of the picture, they’ll navigate the volatile market alone.

In June, FCA imposed a ban on the sale of crypto derivatives to retail investors. But this move didn’t stop the spot trade — which still thrives across UK’s crypto exchanges.

While the FCA ban is still effective, it fails to control investors from accessing derivatives outside the UK — unless they suspect retail investors are financing terrorism or money-laundering activities abroad.

Investors to continue trading on Binance

The UK arm of cryptocurrency exchange Binance assured investors to continue engaging with FCA to resolve any existing issues.

They also confessed to “fully complying with all aspects of the regulator’s requirements”. But that’s subject to confirmation.

In June this year, FCA asked Binance to stop carrying out regulated financial activities and to put a notice on their website. That is yet to happen.

The latest FCA misgivings about Binance will have little effect on the investors, who are likely to continue trading on Binance — despite them not being supervised by FCA.

If financial deals go sour, investors are warned that they’ll have no recourse from the regulator whatsoever.

In June, Binance deposits and withdrawals of the sterling pound were put on a halt. Sadly, the clampdown didn’t stop investors from trading with Binance — as they still withdrew money by moving their cryptocurrencies to other crypto exchanges.

Binance is structured in a way that national regulators can’t take action against them because they have no global headquarters. So, nothing can stop people from trading.

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About the Author: Kate