Binance ban: what is the crypto currency exchange - and why has the FCA banned it in the UK?

Financial Conduct Authority (FCA) has put a ban on the world's biggest crypto exchange from conducting 'regulated activity' in the UK

Binance has been banned in the UK.

The world's leading crypto currency exchange cannot conduct any "regulated activity" in the UK, the Financial Conduct Authority (FCA) has ruled.

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The FCA - UK's financial regulator - ban on Binance is the latest blow to cryptos amid a wider global clampdown on cryptocurrencies, which have seen coin prices tumble.

Financial Conduct Authority (FCA) has put a ban on the world's biggest crypto exchange Binance from conducting 'regulated activity' in the UK. (Pic: Shutterstock)
Financial Conduct Authority (FCA) has put a ban on the world's biggest crypto exchange Binance from conducting 'regulated activity' in the UK. (Pic: Shutterstock)

Leading crypto Bitcoin dropped to a price of £20,712.65 on 22 June - less than half of its mid-April market value of £47,240.05 - leading to experts warning of a 'bear market'.

Here's why the FCA has banned Binance and what the ruling means for UK users.

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What is Binance?

Binance is a crypto currency exchange which allows users to trade digital coins online.

Founded in 2017, Binance has grown to become the world's biggest platform exchange for crypto token trades, with more than 500 cryptocurrencies trading.

Binance - a combination of the words bitcoin and finance - offers a digital wallet feature which allows users to store electronic funds through its platform.

Investors and traders can exchange digital currencies including leading cryptos Bitcoin (BTC), Ethereum (ETH), Litecoin (LTC), Dogecoin (DOGE) among others.

The platform also has its own digital currency Binance Coin (BNB).

The news of the FCA ban on Binance has had little impact on the BNB price, with shares up 3.64% to £208.52 in the last 24 hours (28 June), according to Coinbase.

Why is Binance so popular?

Low transaction fees and high standards of safety and security are among the reasons why Binance has become so popular since its launch in 2017.

Though users cannot trade national currencies for digital tokens, Binance is used daily by traders and investors all over the world to exchange cryptocurrency.

Its technology has the capacity to process more than one million orders per second and also offers users additional services around trading, listing and fundraising, among others.

Its initial coin offerings (ICO) allows crypto enthusiasts launching their own tokens to raise funds to support their projects, with investors keen to jump on the next big thing early.

With Binance, there is no fee charged for crypto deposits. There is a fee, however, if users want to withdraw some or all of their digital stake, which varies depending on the crypto and amount.

Is Binance banned in UK?

Binance owner Binance Markets Limited has been banned from "regulated activity" in the UK by the FCA, in a strongly-worded statement released by the UK financial regulator.

In which, it states Binance Markets Limited, which is part of the Binance Group, is "not permitted to undertake any regulated activities without the prior written consent of the FCA."

The statement reads: "No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK.

"The Binance Group appear to be offering UK customers a range of products and services via a website, Binance.com."

Binance, though, is based in the Cayman Islands, having been formed in China and so UK residents can still use the Binance website despite the FCA ruling.

Binance is not registered with the FCA and is therefore not allowed to operate an exchange in the UK, while Binance said their relationship with its users has not changed.

Binance stated: "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."