TL;DR Breakdown
- Binance plans to launch a new payment technology company, Bifinity.
- The FCA may block the launch due to concerns around investor protection.
Binance, one of the world’s largest cryptocurrency exchanges, plans to launch a new payment company called Bifinity. However, the financial regulator of the United Kingdom, the Financial Conduct Authority (FCA), might obstruct the new company’s operations, especially in the UK, citing previous regulatory concerns with the crypto exchange.
FCA’s concern over Binance
Notably, the Binance Group launched Bitfinty in partnership with Eqonex Limited, the parent company of Digivault Limited, a cryptoasset business regulated by the FCA under the Money Laundering Regulations (MLRs). However, the FCA sees this partnership as a possible attempt to bypass the financial watchdog’s money laundering regulations.
The regulator said it was aware that under the partnership, Bitfinity would advance a US$36 million convertible loan to Eqonex. As a result, “individuals and entities that are part of the Binance Group may have become beneficial owners of Digivault for the purposes of the MLRs.”
Of all the entities listed under the Binance Group, Binance Markets Limited is the only company regulated by the FCA to conduct regulated financial activities in the country. Even at that, Binance Markets Limited is authorized for a limited set of activities, which must only be allowed with the written consent of the FCA, as Binance Markets is not capable of being effectively supervised.
FCA might cancel Bitfinity
The FCA might cancel Bitfinity from operating in the UK, as it noted that it can “take steps to suspend or cancel the registration of a cryptoasset business if it is not satisfied the firm or its beneficial owner is fit and proper.” The leading crypto exchange has yet to comment on the FCA’s claims.
Given the speculative nature of cryptocurrencies, many global regulators, including the UK’s financial watchdog, have been apprehensive about them. The FCA has issued several warnings and measures to protect investors. In January, the FCA announced plans to regulate the cryptocurrency ads space to protect users from misleading information.
The UK regulator also formed a team of experts in late November 2021 to assist in cracking down on illegal cryptocurrency activities.
