The Financial Conduct Authority (FCA) has taken intervening action against Binance’s application for financial promotions compliance in the UK.
This occurred just days after Binance revealed its intention to collaborate with the peer-to-peer lender, Rebuilding Society, in a bid to reach compliance with the UK’s new financial promotions framework.
The FCA introduced its financial promotion guidelines for cryptocurrency enterprises on 8 October. It brought new restrictions on crypto coverage for various media channels, such as websites and social media platforms.
Rebuilding Society hit by FCA restrictions
On Tuesday, the FCA intervened in Rebuilding Society’s operations, imposing restrictions on the firm’s ability to carry out financial promotions for unauthorised cryptocurrency service providers, which includes Binance.
The intervention said that by Wednesday, Rebuilding Society must revoke any financial promotion approvals previously extended to unauthorised parties.
“The firm must not approve the content of any financial promotion for a qualifying cryptoasset for communication by an unauthorized person,” the FCA’s requirement stated.
In addition to this, the FCA directed Rebuilding Society to promptly notify its clients who utilise its third-party financial promotions services. It required the lender to tell its clients that it is not in a position to approve content from unauthorised individuals or companies.
The FCA notice added: “The Firm must, by no later than 5pm on 11 October 2023, withdraw any advertisements or equivalent promotion offering to approve the content of any Financial Promotion containing a Qualifying Cryptoasset for communication by an unauthorised person.”
Binance seeks financial approval
The intervention from the FCA comes shortly after Binance declared its association with Rebuilding Society to meet the UK’s financial promotion regulations.
In a recent Binance blog post, the company mentioned that to be in line with the FCA’s new guidelines, it decided to partner with Rebuilding Society due to its FCA authorisation and regulatory approval.
Earlier in August, Rebuilding Society had also shared news about their new service, saying: “We’re pleased to announce a new service for the approval of financial promotions for cryptoasset firms.”
What are the new financial promotion guidelines?
The FCA’s updated rules for financial promotions of crypto assets came into force on 8 October. These rules restrict crypto promotions on various platforms, such as websites, social media, and online advertising.
As per the FCA, crypto firms that aren’t registered and fail to comply with these promotion guidelines could violate section 21 of the UK’s Financial Services and Markets Act 2000. A breach can be classified as a criminal offense, leading to penalties like a two-year prison sentence, an unlimited fine, or both.
With the introduction of these rules, some regulated entities can authorise promotions for other crypto businesses. For example, Archax is assisting crypto exchanges like Coinbase and OKX in their UK communication efforts.
But these regulatory changes are already changing the crypto landscape in the UK. Certain services, including news feeds on platforms like Binance’s global website and Coinbase’s app, are now inaccessible to UK residents.