Binance Restricts UK Traders’ Access To Risky Crypto Derivatives

Binance Restricts UK Traders' Access To Risky Crypto Derivatives

Binance has decided to restrict UK clients’ access to crypto derivatives after its chief executive said the exchange plans to renew its efforts to gain regulatory approval to operate in the country.

The crypto exchange, which clashed with the Financial Conduct Authority earlier this year, sent notices to UK customers on Tuesday asking them to provide additional information to continue accessing derivatives and other features on the crypto exchange. platform.

The FCA this year banned offering crypto derivatives to retail investors. But global exchanges such as Binance have still been able to offer these services to UK customers via offshore websites, despite the national watchdog’s ban.

“To enable us to comply with UK financial regulations, we ask that you . . . provide additional information,” said Binance’s notice to customers, first reported by Coindesk.

“This information will help us determine whether your access to [certain] products is permitted by local regulatory requirements or will be restricted. »

UK customers registered on Binance before December 14 have until mid-February to answer questions to determine whether they can retain access to derivatives, according to the notice.

A copy of the user questionnaire, provided by a Binance user, asked users to indicate whether they were a wealthy, foreign, or professional trader. Sophisticated traders can still use crypto derivatives under UK rules. But the exchange said “most customers” would not fit into any of those categories.

The limits on its offer mark Binance’s latest concession after a year of sustained pressure from regulators in jurisdictions around the world.

The message referred to futures, options and certain other leveraged products as services that could be restricted.

Binance confirmed that the messages had been sent. “It is an obligation to comply with local regulations. Binance is committed to full compliance, globally,” the group said.

Derivatives and the practice of lending users money to amplify their trades have been a focus of concern for several regulators regarding Binance and other crypto exchanges, as these speculative strategies can quickly expose retail investors to significant risk. serious losses. They also add to volatility in the overall market, according to industry executives.

Earlier this month, Binance Chief Executive Changpeng Zhao told The Daily Telegraph that the company plans to reapply for FCA clearance to operate as a crypto firm in the UK. In June, the regulator ordered Binance to halt all regulated activities in the country and imposed strict requirements in a high-profile “consumer warning”.

Video: Cryptocurrencies: How Regulators Lost Control

Binance Markets Limited, one of the exchange’s UK subsidiaries, withdrew its FCA request ahead of the warning.

The exchange has sought to set up crypto operations in several financial centers, but has been strongly pushed back by regulators over questions about the group’s policies and procedures to protect consumers. The exchange announced on Monday that it would shut down its cryptocurrency exchange in Singapore and withdraw its regulatory enforcement in the city-state, following a reprimand from the local regulator in September.

Crypto investors in many jurisdictions can access Binance’s offshore exchange, which offers spot trading and derivatives, among other services, even if the group has no operations in their country of residence. However, the group has created subsidiaries around the world to gain better access to traditional payment networks.

In July, the exchange announced that it would “reduce” its lucrative derivatives business in Europe, where it has also faced regulatory scrutiny, and reduce the amount of money retail traders can borrow. on the platform to amplify their bets.

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