Binance restricts UK traders’ access to risky crypto derivatives

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Binance decided to restrict UK clients’ access to crypto derivatives after its chief executive said the exchange planned to renew its request for regulatory approval to operate in the country.

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

The FCA this year banned from offering crypto derivatives to retail investors. But global exchanges such as Binance have always been able to offer these services to UK clients through offshore websites, despite the national watchdog ban.

“In order for us to comply with UK financial regulations, we ask you to. . . provide additional information, ”Binance’s notice to customers, first reported by Coindesk.

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

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

A copy of the user questionnaire, provided by a Binance user, asked users to report 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” wouldn’t 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 post referred to futures, options, spreads and certain other leveraged products as services that may be restricted.

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

Derivatives and the practice of lending money to users to amplify their trades have been at the center of the concerns of several regulators regarding Binance and other crypto exchanges, as these speculative strategies can quickly expose retail investors to loss. heavy losses. They also add volatility across the market, according to industry executives.

Earlier this month, Binance chief executive Changpeng Zhao told the Daily Telegraph that the company plans to seek FCA clearance again to operate as a crypto company in the UK. In June, the regulator ordered Binance to stop all regulated activities in the country and imposed strict requirements in a high-profile “consumer warning”.

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

The exchange has sought to set up crypto operations in several financial centers, but has faced strong reluctance from regulators on questions regarding the group’s policies and procedures to protect consumers. The exchange announced on Monday that it would close its crypto exchange in Singapore and withdraw its regulatory application 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, among other services, spot and derivative transactions, even if the group does not have operations in their country of residence. However, the group has set up subsidiaries around the world to have better access to traditional payment networks.

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

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