The Financial Conduct Authority has said it is concerned about a deal to give Binance access to a large UK payments network just months after the regulator warned the exchange poses a “significant risk” to consumers.
Binance, one of the world’s largest crypto platforms, said its users could “now deposit[sterling]. . . via [the] Faster Payment Service ”, a key UK payments network, after it reached an agreement with payments group Paysafe.
The arrangement with US-listed Paysafe represents a step towards restoring key links between Binance and the UK’s financial system. The crypto exchange lost access to Faster Payments last summer after the FCA issued a consumer alert against the exchange and ordered it to stop all regulated activities in the country.
Some of the UK’s largest high street banks, including Barclays and Santander, also moved to block their customers from sending money to Binance following the regulator’s rebuke.
The FCA said that while it had been notified of the Paysafe deal, its “concerns about Binance remain”. The regulator said it had “limited powers to object to arrangements of this kind”.
“Paysafe is aware of our concerns and is subject to close ongoing supervision consistent with our approach for firms of its size. We cannot comment further, ”the FCA added.
Paysafe declined to comment on the FCA’s response to the arrangement. Faster Payments operator Pay.UK did not immediately respond to a request for comment.
Binance said: “We take our compliance obligations very seriously and work proactively and collaboratively with regulators.”
The warning from the UK watchdog last year was the first in a series of regulatory setbacks for the exchange. Market supervisors in financial centers including Hong Kong and Japan also issued warnings and restrictions last year. Binance has no fixed headquarters but has a vast network of affiliated entities around the world that link up to financial groups so consumers can move traditional currency on and off the platform.
The FCA in August said Binance’s “complex and high-risk financial products” possessed “a significant risk to consumers”. It said Binance’s UK affiliate had “failed to” respond to some of its basic queries, making it impossible to oversee the sprawling group.
Binance’s chief executive Changpeng “CZ” Zhao has pledged to repair relations with regulators and set the exchange on course to be fully compliant everywhere that it operates.
While the UK regulator is working to establish anti-money laundering controls for the crypto industry, overseas based companies can generally serve British customers without FCA oversight.
The exchange on Tuesday published instructions for its users on how to deposit funds from their UK bank accounts to Binance via Faster Payments, a network of financial institutions established to provide easier interbank payments.
Philip McHugh, chief executive of Paysafe, said the company, which is overseen by the FCA in the UK, would maintain full control of anti-money laundering and compliance checks for Binance customers. The exchange would be responsible for collecting the information Paysafe needs to run those checks, he added.
“We were impressed by how committed they were to change,” McHugh said.
The crypto exchange has said it plans to renew its efforts to secure regulatory approvals in the UK. In December, Binance sent notices to UK customers requiring them to provide additional information to continue to access high-risk derivatives and other features on the platform, a move the company said would “enable us to comply with UK financial regulations”.