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The U.K.’s Financial Conduct Authority ordered crypto exchange Binance last month to stop all regulated activities in the country. The regulator’s move might have benefited the company’s rival platforms such as Bitstamp, Gemini, and Kraken, which have reported a surge in new users recently.
“Due to the imposition of requirements by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities without the prior written consent of the FCA,” the FCA wrote on its website on June 26, 2021. “No other entity in the Binance Group holds any form of UK authorisation, registration or licence to conduct regulated activity in the UK.”
Despite the warning, Binance can still technically offer crypto trading to U.K. citizens, according to CNBC. The FCA ordered the crypto exchange to add a notice on its website informing visitors that the exchange is not authorized to operate in the U.K.
Binance explained that FCA’s warnings only targeted its U.K. subsidiary Binance Markets Limited and would not impact its services on the Binance.com site. In May, the company’s U.K. entity withdrew its application as a licensed crypto-asset firm in the U.K. because it could not meet anti-money laundering requirements.
However, FCA’s order has negatively affected Binance’s user base in the U.K. Users were unable to make card withdrawals due to an issue with the Faster Payments system while Barclays blocked its cardholders from making payments to the exchange.
Binance’s rivals appear to have benefited from the crypto exchange issues in the U.K. “We’re seeing an increase in customers in the U.K. coming to us, with no changes in marketing,” Bitstamp CEO Julian Sawyer told CNBC. As of Tuesday last week, the Luxembourg-based crypto exchange saw its customers grow by 138 percent since FCA’s warning last month.
The Winklevoss twins’ crypto exchange Gemini also reported a similar surge in users. “We have seen tremendous user growth as consumers look towards approved firms when entering the market,” the head of U.K. Gemini Blair Halliday confirmed. The platform is included on the FCA list of registered crypto asset firms.
The U.S.-based exchange Kraken has also benefited from Binance’s U.K. woes. “The percentage share of signups from the U.K. has approximately doubled in the last couple of weeks, compared to signups in Kraken’s other leading markets,” a spokesperson from Kraken said.
Meanwhile, Binance CEO Changpeng Zhao vowed to better meet regulatory obligations and plans to hire more compliance staff and localize operations. “Compliance is a journey – especially in new sectors like crypto,” Zhao said in a post on Wednesday.
