This is another significant setback that digital money faces.
The government fears digital currencies will be or are now being used by people to avoid paying taxes. Hence, governments around the world want to increase oversight of crypto assets. HMRC does not consider Cryptoassets to be currency or money, however, it is subject to capital gains tax.
The UK Financial Conduct Authority just banned Binance, which is a major crypto exchange. With the prohibition, the platform can’t conduct activity in the country.
The Reason for the Ban
Unfortunately, the watchdog didn’t elaborate on the reason it blocked Binance. However, it stated that Binance can’t operate because of an “imposition of requirements.”
Binance isn’t completely banned, though. It just needs to honor the FCA’s demands until June 30.
The company said that it takes regulatory obligations very seriously. It’s also committed to acknowledging all rules of the country where it operates.
What is Binance?
It’s one of the largest cryptocurrency exchanges in the world. It has locations around the world with a trading volume of around $2.46 trillion.
The crackdown could limit trading in the market and it can affect the reputation of the company.
Binance has to act quickly so its operation won’t be disrupted and affect its traders.
However, the company assured that the ban won’t have a significant effect on activity through its site.
Binance stated that it’s aware of the reports about the FCA UK notice related to Binance Markets Limited. But BML is a different legal entity. It doesn’t offer products or services through its binance.com website.
It means that it does not affect the services it provides on the main site. The relationship with its users has not changed.
Trading cryptocurrencies isn’t regulated in the UK. However, selling derivatives and other related activities requires approval.
The UK watchdog warned about crypto markets’ volatility. The FCA said that consumers need to be wary of ads online that promise high ROH in the crypto asset.
But the UK isn’t the first to send warnings to Binance. On Friday, Japanese regulators warned that Binance is operating in Japan with no proper authorization.
Since December 31, Binance is banned in Canada after the country’s regulators increased their oversight of crypto markets.
The company has already closed its shop in Canada’s most populous province. It did so instead of facing the same outcome as other crypto exchanges that faced lawsuits for failure to comply with the securities laws in Ontario.
In the US, the IRS is boosting its ability to track taxpayers who own cryptocurrencies. It is probing digital currency exchanges. It also threatens to seize tax evaders’ assets.
The Treasury Department now requires cryptocurrency platforms to report to the IRS any transfer that’s worth at least $10,000.
The Treasury wanted that cryptocurrency could pose a detection problem as it could help illegal activity.
Cryptocurrency has a market cap of around $2 trillion. It becomes more valuable than Big Tech companies.
However, the threat of regulation could affect crypto prices. Recently, Bitcoin prices plummeted after China banned payment firms from offering services for any crypto transactions.
China doesn’t allow crypto trading since 2019 because of worries that it would be used for money laundering.
Because of the increased regulatory attention, Bitcoin prices may continue to fall.