The Wild West phase in the crypto sector is almost over.
Binance no longer operate in UK
Binance the largest cryptocurrency exchange in the world was warned that it cannot provide services in the United Kingdom without a license.
The British financial regulator Financial Conduct Authority (FCA) has warned the world's largest cryptocurrency exchange Binance that it can no longer operate in the country. The regulator claims that the service provider of Binance.com is Binance Markets Limited which is part of the Binance Group, the company that is not licensed to operate in the UK.
The FCA also warned the Brits of the risks of investing in crypto assets. The department notes that most of the companies offering cryptocurrency exchange services are not licensed in the UK, which means that should the investors incur any damages they will not be able to contact the financial ombudsman to claim compensation for them.
Representatives of the crypto exchange cited the official announcement of the platform that states that the FCA warning does not affect the services provided by the Binance.com website. The site representatives noted that Binance Markets Limited is a separate legal entity and does not offer services through the Binance.com website.
In the next few weeks, the Binance crypto exchange may warn UK users that their accounts will be closed. The UK is not a crypto-friendly jurisdiction; besides, the country has a clear regulation of financial activities which requires registration with the FCA.
Regulation is an irrefutable factor in market growth. As more and more institutional investors become agreeable to investing in cryptocurrency, the risks diminish.
The Wild West phase in the crypto sector is almost over, and exchanges that adhere to AML (Anti-Money Laundering) and KYC (Know Your Customer) rules are finally gaining some edge in this highly competitive market.
The UK's decision may be related to the events that took place in the first half of 2021, when cryptocurrencies showed the highest volatility in history - strong growth at the beginning of the year followed by a sharp drop.
So far, the decision of the regulator limits only the activities of the largest cryptocurrency exchange that operated in the United Kingdom without a license, meaning that Binance can restore its activities in the UK if it opens its own licensed division in the country. In any case, the British regulator's ban on Binance will not seriously affect the quotes.
In May, it became known that the Department of Justice and the Internal Revenue Service of the United States initiated an investigation against the Binance crypto exchange. Federal authorities conduct inspections for violations in the field of anti money laundering (AML) and taxation laws. So far, no charges have been laid against the site.
In March 2021, Binance became the subject of an investigation by the United States Commodities Futures Trading Commission (CFTC). The regulator studied the work of the company on the subject of allowing American residents to trade in crypto derivatives in the absence of an appropriate license.
Coinbase has received a license to store cryptocurrency in Germany
This will allow the site to continue serving customers in the country. Coinbase shares already rise by 5% to $ 237.
Coinbase, the largest cryptocurrency exchange in the United States, has received permission from the German Federal Financial Supervision Authority (BaFin) to store cryptocurrency, which allows the site to continue serving customers in the country. After that, the value of the shares of the crypto exchange increased by 5% and reached $ 237.
Coinbase shares have been listed on the NASDAQ stock exchange since April 14, 2021. Immediately after the opening of trading, the share price reached $ 381 with a set reference price of $ 250. Within a few hours, the shares rose in price by 12.5% ​​to $ 429.5, but then quotations fell to a local minimum of $ 315. The closing price on the first day of trading was $ 328.28.
At the end of 2019, the German parliament ordered all organizations that store cryptocurrency to obtain a license to operate in BaFin. Coinbase was the first crypto exchange to receive this license.
On June 24, it became known that Coinbase received permission to work in Japan. A subsidiary of the crypto exchange received a corresponding license from the Japanese Financial Services Agency (FSA), which controls financial activities in the country.
Mexico’s Finance Minister Confirms Cryptos Are Banned From Financial System
The statement comes after Mexican billionaire Ricardo Salinas Pliego said his bank would accept bitcoin.
A top Mexican official reiterated on Monday a ban on the use of cryptocurrencies in the country’s financial system.
Arturo Herrera, Mexico’s finance minister, said cryptocurrencies aren’t legal tender assets and aren’t treated as currencies within the country’s current regulatory framework.
Those bans are not expected to be lifted in the short term, Herrera said during a presentation to the Financial Action Task Force, a global anti-money laundering group.
The announcement comes after a Sunday pronouncement by billionaire Ricardo Salinas Pliego, a noted bull, that he was working to make Banco Azteca the first bank in Mexico to accept the cryptocurrency. Salinas is chairman of Grupo Salinas, the bank’s parent company.
Herrera’s comments weren’t explicitly tied to Salinas’ pledge, but came within hours of the businessman’s announcement.
Herrera said his secretariat will publish a four-page communiqué detailing the government’s position.
In a joint statement, the Central Bank of Mexico, the finance secretary and the National Banking and Securities Commission specified that cryptocurrencies are neither legal tender assets nor currencies under the current legal framework. In addition, they warned about the risks of using cryptocurrencies.
The document consists of four pages and was characterized by Herrera as “unusually extensive.”
The three entities reiterated the warnings they issued in 2014, 2017 and 2019 about crypto’s risks as a form of exchange, store of value or other form of investment.
In addition, the document said that financial institutions in Mexico are not authorized to deal with virtual assets such as bitcoin.
Financial institutions that conduct or offer operations with virtual assets without an authorization will be in violation of the regulations and subject to applicable sanctions, the report added.
Mexico is the headquarters of Bitso, the largest cryptocurrency exchange in Latin America. In May, the company raised $250 million in its Series C funding round and reached a $2.2 billion valuation.
The statement on Monday affirms that the government has not authorized the collection of deposits from the general public “through technological schemes related to blockchain or distributed registries, known as stablecoins.”
In May, Bitso CEO Sergio Vogel said on CoinDesk TV’s “First Mover” program the exchange, which has 2 million users, has seen a sharp increase in demand for dollar-linked stablecoins.
South Africa Moves to Tighten Crypto Regulation After Scams
South Africa is moving with more urgency to stiffen oversight of cryptocurrency assets after a proliferation of scams.
A new regulatory timeline foresees finalizing a framework in three to six months, after the publication of proposals earlier in June that requires public comment before approval, according to Kuben Naidoo, chief executive officer of South Africa’s banking regulator known as the Prudential Authority.
“We are trying to put in place the regulatory framework quickly,” said Naidoo, who’s also a deputy governor of the South African central bank. “Our view is that crypto is a financial product and should be regulated as a financial product.”
The approach that’s taking shape means tougher rules could be imminent this year after a jolt of scandals that most recently included a suspected Ponzi scheme, which resulted in the disappearance of an estimated $3.6 billion in Bitcoin.
“Now we are defining this as a financial product and if there are scams where the public is being duped, given incorrect or false information, it is certainly a market conduct issue that should be taken seriously,” Naidoo said.
South African cryptocurrency service providers have been operating unchecked by regulatory powers even as the popularity of the asset class has taken off. Last year, the collapse of Johannesburg-based Mirror Trading International was called the biggest crypto-related scam of 2020 by blockchain data platform Chainalysis.
Summary
The drumbeat for more regulation of cryptocurrencies such as bitcoin has grown this year as their value has soared to $1.5tn amid price extreme volatility, and amid further examples of their use in illicit activities such as money laundering and fraud.
There’s no doubt that if something went up 1,000 per cent it’s very volatile, and you should understand that as part of your portfolio allocation.
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