The Binance cryptocurrency exchange logo is displayed on a phone screen.
Jakub Porzycki | NurPhoto via Getty Images
LONDON – Britain’s move to block Binance strengthens competing cryptocurrency exchanges that have recently reported a surge in new users in the country.
The Financial Conduct Authority recently announced a crackdown on Binance, the world’s leading crypto exchange by trading volume, that is preventing the company from conducting regulated activities in the UK
Binance withdrew its application to register as a licensed crypto asset firm in the UK in May because it failed to meet anti-money laundering requirements, market watchdogs said.
While Binance is technically allowed to continue offering crypto trading to the UK, it has been instructed by regulators to add a notice to its website that it is not authorized to operate in the UK
For its part, Binance said the measures were targeted only at its UK entity, Binance Markets Limited, and would have no impact on the services Binance.com provides in the country.
But after the FCA’s restrictions, Binance in the UK has suffered further setbacks. Customers were temporarily unable to make card withdrawals due to an issue with the UK’s Faster Payments system. Meanwhile, the bank has stopped Barclays customers from sending payments to the crypto exchange.
Binance’s troubles in the UK, however, have been a boon to its rivals, some of whom have doubled user numbers since the FCA restrictions were announced.
“We are seeing an increase in the number of customers in the UK who come to us without any changes in marketing,” Julian Sawyer, CEO of the Luxembourg Stock Exchange Bitstamp, told CNBC.
As of Tuesday, Bitstamp had seen customer growth of 138% since the FCA released its notice on Binance on June 25. Binance declined to comment on this story when contacted by CNBC.
“I think it’s a safe flight,” added Sawyer. “If you are told that the bank you are with is less secure, move the money out of the bank and move it to the nearest bank that is super safe.”
In the meantime, the US stock exchange Kraken has also benefited.
“The percentage of filings from the UK has roughly doubled in recent weeks compared to filings in Kraken’s other leading markets,” a Kraken spokesman told CNBC.
Gemini, the digital currency exchange founded by Cameron and Tyler Winklevoss, is one of the few companies to appear on the FCA’s list of registered crypto asset firms.
“We have seen tremendous user growth as consumers look to approved companies when entering the market,” said Blair Halliday, UK Gemini boss, to CNBC.
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“We expect exchanges and custodians registered with the FCA to continue to gain market share because of the value attached to the approval process,” he added.
Coinbase, America’s largest crypto exchange, declined to comment on this story.
Binance’s problems weren’t limited to the UK
On Tuesday, Binance said it had temporarily suspended euro bank deposits through the Single Euro Payments Area payment system due to “events beyond our control”.
Regulators in Canada, Japan and Thailand have also warned the company that it will operate without a permit.
Binance CEO Changpeng Zhao, better known in the industry as “CZ”, said in a blog post on Wednesday that the exchange “still has plenty of room to grow” and that it has not always done everything right.
“Compliance is a journey – especially in new sectors like crypto,” said Zhao, adding that Binance is hiring more compliance staff and locating operations to better meet its regulatory obligations.
It follows a series of steps taken by regulators in China to fight the crypto industry. Several regions in the country have decided to stop energy-intensive crypto mining operations amid concerns about their environmental impact.
Earlier this week, Beijing called for the closure of a company suspected of providing software for virtual currency transactions and reiterated its tough stance on crypto.
Digital currencies rebounded earlier in the year, with Bitcoin jumping to an all-time high of nearly $ 65,000 in April. However, they have fallen sharply since then, with the entire crypto market dropping more than $ 1 trillion in value in the past two months.