[avvt4avaw]

I thought it was worth clarifying exactly what has happened here, since neither the BBC nor the FT articles make it particularly clear.

The entity that the FCA has acted against is Binance Markets Limited (BML) which the parent Binance Group acquired earlier this year, in part because of its existing registration with the FCA which allowed it to carry out a limited range of regulated activities in the UK.

The FCA has now placed restrictions on BML which remove its ability to carry out those regulated activities -- however BML was not actually doing any business in the UK so the effect of this is limited.

The FCA also issued a consumer warning which, among other other things, reiterated that no entities in Binance Group are registered with the FCA and therefore cannot carry out regulated activity in the UK. Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it.

A possibly outcome is that Binance will be a bit more circumspect about offering derivatives trading to UK retail because they want to build a more substantial UK business in the future. We saw this with Bybit a while ago, where they do not allow UK retail to use their website (although they have an exception for sophisticated investors, who can self-certify as an eligible counterparty and continue to trade on Bybit). I wouldn't be surprised to see this.

[yholio]

> Again, the impact of this is limited since the entity that you interact with when using the Binance.com website is not based in the UK, and the FCA does not have jurisdiction over it.

Why would you say that? Providing services to any British citizen over the internet will fall squarely within the regulatory domain of the UK, regardless of the website used to connect, the physical location of the server or the jurisdiction of the company.

[Communitivity]

The FCA has no enforceable jurisdiction over Binance, because Binance's physical and financial assets are not in the U.K. - except they do have an office that could be seized, 3 Beeston Pl, London. It might be no more than a token office though.

They seem to have a number of offices in places, one per country. The US one is in Fresno, CA.

Their headquarters is in Malta.

They sell derivatives, and they are headquartered in Malta. Who actually uses good or services from these people?

[toomuchtodo]

Do Binance officers, directors, or employees ever plan on transiting the UK or the soil of it’s allies? Becoming persona non grata with a nation state is a Big Deal.

[RhodoGSA]

Well, it's limited in scope as long as they don't intentionally go out of their way to circumvent the ban. UK citizens can still access binance's offering via a VPN, although it is not legal. You can't make the entire executive team non grata because your citizens are using a VPN to access a banned product.

The whole thing with this is it shows how powerless nationstates have become in their ability to regulate these kind of things. Binance has the possibility of being regulated to death, but what about the decentralized derivitives exchange DxDy or Sythetix? Here in the US it is illegal as a retail investor to have more than 3x trading leverage on securities. I can get access to 10x leverage on Sythetix as a retail trader which is technically illegal, but since it's not a security it's in this weird gray area. Even if the US finally starts understanding the possibilities inherent in crypto, they wouldn't be able to stop it even if they brought the whole weight of the US nationstate ontop of it. It's decentralized. You'd have to shut down Eth, Matics, DOT, Solana, Etc. To stop these kind of exchanges. Each of these orgs might have a few people to arrest or point too, but are largely 'Decentralized' and already on the blockchain.

[alasdair_]

>You can't make the entire executive team non grata because your citizens are using a VPN to access a banned product.

The USA did exactly this with a large publicly traded UK company. They arrested the executives the moment they touched down in the US on a transfer flight.

The CEO is now going to jail: https://casinobeats.com/2020/03/26/pokerstars-founder-isai-s...

[RhodoGSA]

Haven't heard of this before, but after some research they willingly didn't comply with any of the regulation. They allowed money to enter from US bank accounts. Binance has verification for the Fiat onramp for UK citizens. What i was discussing above was using already purchased crypto and trading it on binance on a VPN using leverage/Margin. A.) pretty unavoiable and B.) pretty untraceable.

[wrboyce]

> UK citizens can still access binance's offering via a VPN

Are Binance not required to make would-be customers jump through all sorts KYC shaped hoops?

[RhodoGSA]

If you require deposits in fiat. If you already have crypto you don't need any amount of verification. You can utilize a BTC atm and create an account with only an email.

[nabla9]

> The FCA has no enforceable jurisdiction over Binance

If it goes so fart that regulators start send subpoenas or other legal requests to banks Binance uses, those banks will comply if they want to have transactions in UK. Alternative is that all money transfers from UK will cease. Not only Binance would be cut from the UK but also other bank customers.

[LightG]

Malta ... the last great bastion in clean money and banking.

/s

[subroutine]

> They sell derivatives... Who actually uses good or services from these people?

Are you referring to just the BML subsidiary or Binance Group? Binance does provide its own coin (BNB), which can be used to pay fees on their exchange. That they provide access to an exchange people pay to use, seems like a service.

[pessimizer]

> LONDON, June 28 (Reuters Breakingviews) - Regulators have gotten their heads around crypto assets. The next challenge is getting their hands on the companies. Britain’s Financial Conduct Authority on Saturday said that Binance Markets, the local arm of the world’s largest crypto exchange, was “not permitted to undertake any regulated activity in the UK”. Shortly after, the company said on Twitter that the notice has “no direct impact on the services offered on Binance.com”.

> How can that be? In general, the FCA can only regulate companies that are either based in Britain or that actively promote products there. A bitcoin trading platform registered elsewhere doesn’t necessarily count: according to Forbes Binance is based in the Cayman Islands. Founder Changpeng Zhao sought regulatory approval for Binance Markets, but its main services are unregulated and offered instead by the parent group. It’s not clear what he did to irk the FCA, or whether his customers will care. What’s obvious, though, is that the watchdog lacks powers to police a fast-growing part of the financial sector. (By Liam Proud)

Futile UK crypto curb flags regulatory blind spot

https://www.reuters.com/breakingviews/futile-uk-crypto-curb-...

[read_if_gay_]

Right, just like Facebook is certain to adhere to European privacy laws.

[elliekelly]

It’s apples and oranges. As a regulator, the FCA has a lot more teeth than the Information Commissioner. The FCA also has a much more persuasive enforcement mechanism: frozen bank accounts. It’s a lot easier for facebook to keep servers outside of the UK than it is for BML to keep money out of the UK. Any prohibited transaction with a UK citizen is now a risk not just for the potential regulatory headache it might provoke but for the chain of accounts it risks flagging to authorities.

[mariallery]

This might well be by law, but in practise we don't see that, which i would argue is of higher meaning.

[itsoktocry]

>The FCA also issued a consumer warning which, among other other things, reiterated that no entities in Binance Group are registered with the FCA and therefore cannot carry out regulated activity in the UK.

The "impact" of this is that the regulators are beginning to take actions against the wild-west of the crypto world, regardless of how toothless each individual action is.

Put aside your opinions of cryptocurrencies as a technology...there's no way sovereign governments were going to let this fly. There fireworks are just starting.

[rawtxapp]

Are you saying that crypto world wasn't regulated thus far? You realize that's not the case right? SEC and CFTC rules still apply and they have sued companies/people in the crypto space already. These companies and people also have to comply with IRS laws around taxation. Pretty much all of them have stringent KYC/AML verification systems.

[ernopp]

DeFi protocols don't have KYC/AML systems. All they know about is your wallet, and from that wallet you can buy any token, borrow/lend, add liquidity to a market-maker pool, etc.

[rawtxapp]

The goal of regulators should be to stop people from taking advantage/scamming others, not to stop innovative financial products from being built.

Defi protocols (at least on eth) are open source, so I can verify that they are doing what they are supposed to be doing and use those products. It would be far from ideal if some regulator decided that we can't use it because reasons x,y,z.

[jacquesm]

Regulators have far broader scope for regulation than just to ensure that people are not taken advantage of or scammed.

They don't stop innovative financial products from being built, they might stop them from being used for a particular purpose or even at all depending on how a particular development impinges on the list of items for which they regulate.

Amongst others, and depending on where you live your local regulators may add or subtract from this list considerably:

- fairness

- transparency

- stability

- anti money laundering

- anti terrorism financing

- tracking of ultimate beneficiary owners

[RhodoGSA]

That list was developed for traditional finance. After messing around with DxDy protocol, i learned that literally all of those point are impossible. Also, how would you shut them down if they don't comply - It's a smart contract on eth. Even if you arrested everyone involved, it 'lives' outside of the reach of the US gov unless you ban all of eth.

[jabits]

You are wrong to include fairness on your list (and probably stability).

[lottin]

> It would be far from ideal if some regulator decided that we can't use it because reasons x,y,z.

Not for you to say. Society as whole decides which regulations are ideal.

[rawtxapp]

Sure, but we also live in a free society, so they can't just ban things because they feel like it without swift opposition. If it's a legitimate thing that people want, it'll still continue to exist, but would only move underground (for example, we know how alcohol ban worked out).

[itsoktocry]

>You realize that's not the case right? SEC and CFTC rules still apply and they have sued companies/people in the crypto space already.

Famous people are literally pumping scams to millions of followers on social media every single day, so I'm not sure a couple people getting sued means anything.

[ernopp]

Indeed. There was a great article in the FT on this looming battle recently:

> Human society, the historian Niall Ferguson says, oscillates between the dynamic of a metaphorical “tower” and the “square”. Sometimes institutions or leaders control social groups in hierarchical ways, just as church towers overshadowed medieval European cities.

> At other times, horizontal networks shape events, operating like crowds in ancient city squares. The “square” used to work best in small, face-to-face groups, but digitisation now enables peer-to-peer systems to operate on a massive scale.

> Now, however, a “tower” dynamic is entering the frame. On Wednesday, the Bank for International Settlements (the central bankers’ bank that, in a delicious irony, occupies an actual black tower in Basel) issued a striking report that lashed out at the “square”.

https://www.ft.com/content/9481d93d-c7ef-4749-9916-bc860d538...

[lbriner]

I'm not sure what they realistically do. They regulate banks but at least banks have deep enough pockets to pay the fines. What do you do when 18 and 21 year old brothers get hacked and lose $100M+?

Well, you say, they wouldn't get registered because they wouldn't have what they would need to provide a fair risk to customers. Then what? People will simply run the exchanges elsewhere and the money will keep getting "lost", "stolen" or seized by the authorities.

[davidebaldini]

Bank deposits of legal tenders are insured by the central bank. In the Eurozone the ECB insures all personal deposits up to 100.000€. When the bank of Nicosia, Cyprus went bankrupt and the account holders could no longer withdraw, their losses were fully subsidized by the ECB, up to the 100.000€ limit.

This undue confidence or trust we bestow in regulated banks comes at the expense of the wider public: when we lose our deposit due to insolvency, everybody is forced to pay for it by the monetary expansion of the ECB, which covers our loss by printing (or by digitally creating) more euro, and distributes this minted money to the affected bank, allowing withdrawals to resume. This intervention of the ECB dilutes the purchasing power of every unrelated person holding euro, regardless of their country of residence, and regardless on how meticulous they are in choosing a reliable bank. Even the CFA franc in West Africa suffers from this enforced depreciation, being pegged against the euro at a fixed ratio.

Thus, the account holders gain an artificially strong confidence in the bank of their choice, regardless of whichever bank that might be, regardless of how much risk exposures the bank takes, regardless of what financial instruments it edges against, and regardless of the size of its fractional reserve compared to its liabilities. It is an insurance whose only purpose is to allow the bank to take undue risk with volatile instruments and to collectivize any resulting losses against the public, while deluding the account holders with the ancillary excuse that their deposits are safe no matter what.

The alternative to having 21 year old Joe running a million-dollar crypto exchange website from a laptop in his basement is to apply fucking due diligence in choosing our counterparty, and prosecute whenever proper fraud and intentional deception take place.

[jimmaswell]

Citizens need to push back more if they want to keep any rights. UK citizens have a poor track record of this, gladly giving up most of their guns and having nothing to say about the absurd anti-knife campaign and fining people for nazi jokes, but they did start having some large-scale protests at the prospect of further lockdowns so maybe they're starting to grow some spine.

[monkeydust]

Most players in crypto space including exchanges want regulation. It wil legitimize the space and that will in turn allow more institutional money to flow in.

[madamelic]

Everyone who would benefit financially from regulation wants regulation.

Regulation is the strongest moat you can have.

[ac29]

If they want regulation, why aren't they registered with the FCA?