規制
Binance Begins Restricting Platform Access as the OSC, FSA, and FCA Issue Warnings
Binance, one of the world’s largest digital asset exchanges, has just experienced a tumultuous weekend as regulators publicly called out the company for its actions. While in some cases this came simply as a public warning, others have opted for an outright ban in certain jurisdictions.
A Rough Weekend for Binance
With the rise in popularity seen in digital assets over the past year, it isn’t surprising that world regulators are placing an increasing amount of attention on the sector’s service providers – Binance included.
In each of these following instances, these regulatory crackdowns are believed to stem primarily from Binance choosing to support various derivatives on its platform – a type of asset requiring specific licensure to put on offer. Examples of such derivatives include both futures contracts and tokenized stocks representing traditional securities.
Beyond offering such assets, various regulators have placed increased requirements on exchanges to demonstrate adequate anti-money-laundering (AML) safeguards. This step has only been taken by a handful of companies – Binance is not yet one of them.
Ontario
In the Spring of 2021, the Ontario Securities Commission (OSC) placed a deadline on service providers within the digital assets sector to register with the regulatory body. In the time since, it has become clear that very few of these companies adhered to this demand – the result? KuCoin, ByBit, and Poloniex, have each been banned from offering their services to clientele living in Canada’s most populated province.
Seeing this trend, Binance appears to have made the preemptive move in restricting its services to the same population – no doubt anticipating a similar ban on the horizon from the OSC.
Binance addressed its clientele, dubbed ‘Binancians’, stating,
“As part of our continuing compliance efforts, Binance has updated its Terms of Use to provide that Ontario (Canada) has become a restricted jurisdiction, effective 2021-06-26…Binance can no longer continue to services Ontario-based users”
If this move was indeed the result of listing assets such as tokenized stocks, it would stand to reason other platforms doing the same (e.g., Bittrex) will soon announce similar moves.
For the time being, these Canadian restrictions appear to be isolated within Ontario, and have not yet spread to the country’s various other provinces and territories.
United Kingdom
As of January 6th, 2021, the Financial Conduct Authority (FCA) banned the sale of ‘crypto-based derivatives and exchange-traded-notes (ETNs) for retail investors residing within the United Kingdom’.
A recent notice posted by the regulator now appears to single out Binance Markets Limited (a subsidiary of the Binance Group), indicating that the company is not currently sanctioned to operate within the United Kingdom. While it is not clear, it is believed that this move was taken due to a violation of the aforementioned restrictions put in place on derivatives and ETNs months ago.
This particular situation is noteworthy, as the actual ramifications of the FCA are not clear. While the regulator has issued a public notice specifically referencing Binance.com, the company itself has refuted a connection to its main platform in a series of tweets stating,
“We are aware of reports about an FCA UK notice in relation to Binance Markets Limited (BML). BML is a separate legal entity and does not offer any products or services via the Binance.com website.
The Binance Group Acquired BML 2020年5月 and has not yet launched its UK business or used its FCA regulatory permissions. For questions related to BML, please contact [email protected].
The FCA UK notice has no direct impact on the services provided on Binance.com. Our relationship with our users has not changed.
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.”
At the time of writing, no further clarification has been provided by the FCA, leaving many wondering exactly who, and what services, will be affected.
Japan
While confusion may remain over the actual actions between Binance and the FCA, things are a bit clearer in Japan. Days ago, the nation’s Financial Services Agency (FSA) issued a repeat warning of their previous 2018 address to Binance.
In each instance, Binance and the public, were each warned that the company does not have authorization to operate within Japan. However, the company has commented in the past that it does not operate in Japan. This makes the warning particularly interesting, as it stands to reason that the FSA believes Japanese citizens are finding ways to access Binance services indirectly.
Decentralized Exchanges to Benefit?
If one thing is clear from the above examples, it is that centralized exchanges will need to either adapt or die. Changes are rapidly occurring, requiring these companies to operate under heavier scrutiny. If they fail to do so, traders will begin to migrate towards the use of decentralized exchanges – a transition which is already occurring among the tech-savvy.
The reason for the transition is due to the structuring of a true decentralized exchange. This structuring sees the elimination of companies like Binance, allowing traders to buy/sell assets in a direct peer-to-peer action. Offerings such as these can not be regulated as easily as their centralized counterparts, as there is no company or individual upon which enforcement actions can be taken.
Market Reaction
Interestingly, despite the increased attention being put on Binance, crypto markets saw a modest recovery over the past 48 hours. With BTC breaching $34,300 USD at time of writing, this move upwards also bucked a trend of weekend ‘meltdowns’.
