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FCA grants approval to a crypto firm under AML-CTF norms; Others continue to wait

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UK’s Financial Conduct Authority’s or FCA has accepted registration requests by digital asset market maker Wintermute under anti-money laundering and counter-terrorist financing or AML-CTF regime for crypto firms. According to the Wintermute website, the platform’s cumulative trading volume stood at $1.72 trillion since January 2020.

In addition to that, data from the firm’s site revealed that it trades more than $5B on a daily basis across dozens of different trading platforms and facilitates more than 5,000 trading pairs.

The latest developments assumed significance because it took more than a year and a half of in and out with the FCA to gain approval of the application that encompasses the firm’s over-the-counter [OTC] spot business. Speaking on the news, the company’s chief operating officer Marina Gurevich said

“Wintermute has always held itself to the highest compliance standards and has built rigorous KYC-AML processes.” Reading along similar lines the official tweet stated, “We view this registration as an important step in our continued dialogue with the regulators globally.”

FCA’s stricter rules have led many crypto firms to shift

About 100 crypto firms are still waiting for the green signal to begin their operation in the U.K. As March 31 deadline approaches, it seems FCA‘s delaying tactics might force many crypto service providers to move their business offshore in order to avoid stricter, new anti-money laundering regulations.

A total of 96 crypto firms’ fate hangs in balance, with just six having won full approval, as per sources. More than half of the 153 firms that applied have either been rejected or decided to withdraw to avoid an outright denial that could dent their ability to apply for AML approval in other nations.

Of that, 27 are firms still operating under the temporary approval permissions that are slated to expire next month, and 69 have their applications pending.

The March deadline to win a place on the AML register has the potential to backfire, a representative of Vienna-based cryptocurrency exchange BitPanda told in an interview. Last June, crypto loan provider Celsius said in a blog post that “increased regulatory uncertainty” forced it to shift from the U.K. to the U.S. And had stopped accepting new U.K. clients.

Binance could put users at risk as it is unsuited to supervision, FCA affirms

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Prominent cryptocurrency exchange, Binance was seen undergoing immense scrutiny from regulators across the globe. While the platform tried to comply with regulations put forward by financial watchdogs, one such regulator revealed that Binance was not capable of being properly supervised.

The last couple of months seemed to be quite tough for the crypto exchange as it came under the purview of an array of regulators. United Kingdom’s regulator Financial Conduct Authority [FCA] and Binance had a major fallout as the regulator urged the exchange to shut shop for operating without a license. As the exchange was trying to comply with these laws, the FCA released a supervisory notice.

The regulator, back in June suggested categorized the exchange as a “complex and high-risk financial product.” This would mean that Binance would be considered a threat to the investors. therefore, this made the platform “not capable of being effectively supervised.”

The exchange stated,

“This is of particular concern in the context of the firm’s membership of a global group which offers complex and high-risk financial products, which pose a significant risk to consumers.”

Binance has reportedly complied with the FCA’s requirements

Addressing the same, a spokesperson of Binance suggested that the platform had fully complied with the requirements put forth by the FCA. The spokesperson stated,

“As the cryptocurrency ecosystem industry continues to grow and evolve we are committed to working with regulators and policymakers to develop policies that protect consumers, encourage innovation, and move our industry forward.”

However, the FCA noted that the platform had overlooked two particular requests for information. This consisted of information about the wider global business model of the exchange as well as its stock tokens.

Consequently, the exchange noted in a recent document,

“The FCA considers that the firm’s responses to some questions amounted to a refusal to supply information.”

Binance ceases euro bank deposits as regulators come in strong

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Major cryptocurrency exchange, Binance, has been making headlines almost every day following the immense scrutiny from regulators across the globe. While the regulators of different regions revealed that they wouldn’t back down, Binance was seen making some severe changes.

The world’s largest cryptocurrency exchange was seen thriving in the crypto-verse. Binance did not shy away from entering new markets. The crypto platform veered into different countries across the globe and made sure to stay relevant throughout. Now, as the exchange continues to reside under the spotlight, it was for all the wrong reasons.

Regulators from the UK, Japan, Ontario, and the Cayman Islands have been expressing distress over the exchange’s existence in their respective regions. As they continue to allege that Binance has been functioning without a proper license, banks were complying with the regulators. UK’s prominent bank, Barclays, urged its customers to refrain from engaging in transactions with the exchange.

In more recent news, the crypto exchange sent an email to its customers pointing out that it would terminate bank transfers in euro for the time being.

Binance temporarily suspends EUR deposits through SEPA Bank Transfers

In an email sent to the users of Binance on Tuesday, the platform noted that euro deposits through the Single Europe Payments Area [SEPA] would be halted until further notice. Suggesting that the platform was enduring circumstances that were beyond its control, it said,

“Due to events beyond our control, we are temporarily suspending EUR deposits via SEPA Bank Transfers from 8 am UTC on July 7, 2021.”

However, the email did not elaborate on the reason behind the decision. But, it was quite evident that regulators, particularly the Financial Conduct Authority [FCA] were coming in strong. In a recent “A letter from our CEO: Reflecting on Progress and the Road Ahead,” CZ compared the crypto-verse to cars and pointed out that traffic and safety laws were put into place after cars were developed.

He added,

“Laws and guidelines were developed along the way as the cars were running on the road. These are frameworks and laws we take for granted today that allow this powerful technology to be used widely and safely. Crypto is similar in the sense that it can be accessible for everyone, but frameworks are required to prevent misuse and bad actors. Clarifying and building the first set of standards is critical for the industry’s continued growth. And Binance wants to be a positive contributor.”

Binance Clarifies: FCA UK notice has no direct impact on Binance.com services

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Binance has issued a clarification after the UK Financial Conduct Authority [FCA] warned the cryptocurrency exchange and prohibiting it from carrying out crypto-related activities. This was enough to stir the market which has been facing regulatory clampdowns in certain parts of the world.

While explaining that Binance Market Limited [BML] is a separate legal entity, the exchange, responded in a series of tweets confirming that it does not offer any products or services via the Binance.com website.

The Binance Group had previously announced the acquisition of BML back in May 2020. Till now, the platform has not yet rolled out its business in the UK nor has it used the FCA regulatory permissions. In short, BML is not operational yet.

Binance maintains that nothing has changed

The CZ-led crypto exchange also clarified that the latest notice by the regulatory watchdogs of the country essentially “has no direct impact on the services provided on Binance.com further adding that its relationship with the users of the region has not changed. Its tweet read,

“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.”

The official press release had earlier stated that, due to the imposition of requirements by the regulatory entity, Binance Markets Limited [BML] is not currently allowed to engage in any regulated activities without the prior written consent of the FCA. However, the FCA has admitted that the restrictions were applicable to only the derivative products, and identified that spot trading of digital assets is outside its regulatory purview.

Furthermore, FCA’s notice does not prohibit the platform’s clients from using the platform, however, it should be noted that the UK authorities are under no obligation to protect them in the event of an eventuality.

The latest news comes in the backdrop of intensifying scrutiny against Binance among the regulatory entities especially in countries like Canada and Japan. Despite a slew of negative back-to-back news regarding the cryptocurrency exchange, Bitcoin and the altcoin market have not felt the FUD episodes.

Binance faces severe clampdown by regulators of UK, Japan, Ontario this week

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The world’s largest cryptocurrency exchange Binance is facing a massive crackdown amidst market-wide beating. In the latest development, the UK Financial Conduct Authority [FCA] has released a statement wherein it revealed that Binance Markets Limited is not permitted to undertake any regulated activity in the country.

FCA further went on to comment that no other entity coming from Binance Group currently holds any particular class of authorization, license to carry out authority, or a registration in the country.

The official press release, stated,

“This firm is part of a wider Group [Binance Group]. 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. No other entity in the Binance Group holds any form of UK authorization, registration or license to conduct regulated activity in the UK.”

FCA has reportedly identified myriad companies that are advertising and even selling investments when it comes to crypto-assets but do not have authorization from the regulatory watchdog. It warned the users against engaging or investing in a type of crypto-asset via those platforms, and said that they will not be able to access the Financial Ombudsman Service, or even the Financial Services Compensation Scheme if something goes wrong.

Trouble Brewing for Binance

This is not the first time that the cryptocurrency exchange has been under intense scrutiny from regulatory entities. In fact, the latest news comes on the tails of fresh statements issued by financial regulators in Japan and Canada that echoed a similar sentiment. Reiterating its 2018 stance, Japan’s Financial Services Agency [FSA] issued a warning this week in which it stated that the CZ-led exchange is not registered to do business in the country.

Soon after this, Binance announced terminate operations to Ontario-based users, claiming it to be a “restricted jurisdiction.” In an official statement, the exchange advised the users of the region to take immediate measures to close out all active positions by the 31st of December, 2021.

Bybit To Pull The Plug On Its UK Branch Following FCA’s Crypto Derivative Ban

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Bybit, a cryptocurrency exchange based in Singapore in a recent announcement revealed that it would stop offering its services to the citizens of the United Kingdom.

As the value and demand for crypto are growing untethered, the adoption rate of these digital assets was following suit. This increased adoption of crypto had coerced governments across the globe to keep an eye on the industry and protect their respective citizens from any potential losses considering the volatile nature of the crypto market.

The UK government, particularly the Financial Conduct Authority [FCA] back in October 2020, decided to put a ban on retail crypto derivatives trading. While this was made effective starting from January 2021, products like futures, exchange-traded options, and several others went on to be outlawed.

Steering away from any potential repercussions of continuing in the country, crypto exchange, Bybit revealed that it was bidding adieu to the UK market.

Bybit Gives Its Users Time Until The End Of The Month To Withdraw Funds

In a recent blog post, Bybit urged all its UK users to close all their positions by 31 March 2021. Any further sign-ups using UK mobile numbers as well as IP addresses would reportedly be restrained.

The post read,

“If you are either a U.K. resident or citizen, please close all your positions and withdraw all account balances by 8AM UTC, March 31, 2021. Thereafter, customers located in or are residents of the U.K. will be restricted from accessing or performing any trading activities on Bybit.”

The platform further affirmed that it was doing so to comply with FCA’s crypto derivative ban.

Furthermore, the exchange prompted the aforementioned users to address the situation immediately. The post explained that the exchange would be seeking ways to continue serving its users by urging the regulations to investigate more options. “We hope to be able to earn the privilege to serve you again in the future,” the exchange added.

UK’s FCA Claims Fintech Firm Lanistar Has Not Received Regulatory Sanction, Company Responds

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The rapid growth of the fintech industry has grabbed the attention of financial regulators all over the planet with the discussion around privacy taking priority. Europe is one of the few regions where the financial ecosystem has been taken over by digital innovation with some players trying to fly under the regulatory radar.

On Wednesday, the United Kingdom Financial Services Authority issued a warning to fintech company Lanistar for launching services without the body’s approval. The FCA stated that organizations will not be allowed to run investment scams under the pretense of nascent technologies.

Lanistar had recently made waves in the fintech space when several digital influencers posted about the fintech firm’s product on their social media handles. Some of these ‘celebrities’ even posted the new Lanistar digital card promo without clearly stating that it was an advertisement. As soon as the FCA got wind of the product, the government watchdog issued the aforementioned notice.

According to the FCA statement:

“ This firm [Lanistar] is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation. [S]ome firms act without our authorisation and some knowingly run investment scams”.

Lanistar claims to help customers better manage their facilities using their native polymorphic technology and an open banking system. The firm had earlier released statements citing FCA approval which seems to have come under fire after the latest warning. FCA officials have taken a stand that the services do not come under any audit conducted by them.

Founded by entrepreneur Gurhan Kiziloz, Lanistar has made its voice clear during the controversy. Lanistar said that they were aware of the notice and insisted that all of the company’s workings came under the legal prerogative. As of now, the company is set to contact the FCA and provide a clear answer to its user base.

U.K. Financial Watchdog Registers Gemini Crypto Exchange Firm

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The U.K. financial watchdog has given the green light to U.S. crypto exchange firm Gemini to run its operations in the United Kingdom. The cryptocurrency exchange founded by the Winklevoss twins has registered its U.K. branch with the Financial Conduct Authority.

The Financial Watchdog rolled out mandatory risk assessments for exchanges in January this year to determine their compliance with the Fifth AML Directive (AMLD5) and the Counter-Terrorism Financing (CTF) Regulations of the European Union. The new regulations require all cryptocurrency firms operating in the United Kingdom to report their operations to the FCA. Archax crypto exchange was the first exchange firm to be approved by the authority under the new laws.

All crypto firms are required to comply with new requirements

According to the Financial Conduct Authority, cryptocurrency entities operating in the U.K. have until January 10, 2021, to comply with the new requirements. Gemini’s U.K. branch, Gemini Europe Limited, registered with the financial watchdog early this week. However, the authority has not revealed the exact date when the firm’s new registration will take effect.

Although Kraken claims it is the UK’s first licensed crypto exchange, only a United Kingdom Financial Conduct Authority (FCA) Multilateral Trading Facility (MTF) license was given to its subsidiary Crypto Facilities on 6 July. Moreover, according to FCA.s register, both Archax crypto exchange and Gemini registered their operations in the U.K. this week, and are the only two firms on the entry. However, the Archax’s registration entered into force on August 18, unlike Gemini, which is not specified.

Currently, the Gemini crypto exchange is adopting measures to fortify its oversight tools as it sails through the FCA’s procedures. According to a recent report by Bloomberg, the American exchange had chartered Ventus Systems Inc. to supply the firm with anti-market manipulation tools.

European nations implementing AMLD5 and FATF recommendations

European authorities are currently enforcing the AMLD5 and FATF recommendations.  Ireland is presently structuring its cryptocurrency regulations to combat money laundering and financing of terrorist activities. However, the new cryptocurrency regulations could pose more challenges to the Irish cryptocurrency sector. Notably, the cost of compliance might push some startups out of business.

Wirecard to Resumes Operations After FCA Lifts Restrictions

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The U.K. Financial Conduct Authority ( FCA) announced on 29 June that it would lift the restrictions imposed on the German payment firm Wirecard AG, allowing Wirecard to resume operations. The watchdog noted that it had provided a written agreement to Wirecard ‘s subsidiary, Wirecard Card Solutions, to resume its e-money and payment services, although some limitations remain.

The UK financial watchdog ordered the e-payment firm to halt operations on 26 June, following the submission by its parent company of an insolvency application in Germany. The move to lift the ban allows the users of the firm to access the financial services they have been locked out.

Wirecard’s clients can now access financial services

The limitations imposed on the fintech firm include not being able to dispose of any assets or money, not to run any regulated activity, and put a statement on its official website notifying users that it is no longer authorized to carry out regulated activities. Nevertheless, clients can now use their debit cards freely without interruptions. A statement by FCA reads:

“We know that some people may have faced difficulties over the weekend and we worked with DWP, HMT and the Home Office in order to help anyone suffering financial distress. Anyone who is still in difficulties should see our website for more details.” 

Insolvency proceedings

Despite the lifting of the restrictions by the FCA, experts suggest that the issue could have permanent damage to people’s trust in fintech firms. In particular, firms such as Curve and Anna rely on their e-money licenses to manage payments but do not hold banking licenses to hold client funds. The funds are instead ring-fenced with a third party financial institution.

Germany-based Wirecard has stated that it will continue to operate despite insolvency filings last week. The company also stated that it is exploring whether its subsidiary firms will also be required to apply for insolvency. In addition, the American subsidiary of the company which it acquired from Citigroup in 2016; stated on 29 June that it was looking for a buyer.

UK-Based Crypto Firms Receive Closure Threats from FCA

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The UK-based crypto firm received a reminder from the Financial Conduct Authority on 22 June regarding the submission of completed registration forms before the end of the month. The Authority intends to create adequate time for the processing of applications before the registration deadline of January 2021.

The FCA is responsible for overseeing the efforts of the United Kingdom to combat financial crimes such as money laundering and terrorist financing. Besides that, earlier this year, on 10 January, the Authority assumed jurisdiction over more power over virtual assets.

“Any businesses that started carrying on business in the UK immediately before January 10 2020 and are not registered by the FCA by the January 10 2021 deadline will have to cease carrying on business. Any new businesses which began operating after January 10 2020 must be registered with the FCA before carrying out any business,” wrote the FCA.

FATF and AMLD5 implementation in Europe

The Fifth Anti-Money Laundering Directive came into force in the United Kingdom on 10 January. The Directive, which will be implemented in all European union member countries, is intended to restrict crypto-related companies. The AMLD5 extended the realm of knowledge-your-customer (KYC) that crypto-exchanges should undertake.

UK-based crypto businesses should also register with the Financial Conduct Authority and should also be verified by the authority. Digital currencies are popular with criminals for a valid reason; their privacy features. According to a report by the research firm Cypher Trace, 0.69 percent of all cryptocurrency transactions in UK-based crypto firms originally came from criminals.

UK-based crypto firms to comply with new regulations

The FCA is tightening loops to commit such financial crimes in the United Kingdom. The authority highlighted that it is motivated to oversee UK-based crypto firms that are compliant with the new AMLD5 directive and FATF regulations; the body will take the necessary response if the firms fail to comply with all the new rules.

Furthermore, UK-based crypto firms should also comply with the new regulation in the industry. The Financial Action Task Force (FATF) proposed that crypto firms abide by the “travel rule.” FATF is an international multi-governmental authority; tasked with combating organized crime, corruption, and terrorism.