FCA reiterates authority to 'suspend or cancel' registrations of crypto firms following Bifinity concerns

The UK’s Financial Conduct Authority, or FCA, has issued a warning to Binance Markets in response to Binance’s payment company Bifinity a...

The UK’s Financial Conduct Authority, or FCA, has issued a warning to Binance Markets in response to Binance’s payment company Bifinity and investment firm Eqonex entering into a strategic partnership.

In a statement on Monday, the FCA reiterated that Binance Markets Limited was not permitted to conduct certain regulated crypto-related activities in the UK without prior consent due to concerns about the company’s inability to “be effectively supervised”, claiming that some of its products posed “significant risk” to investors. The financial watchdog has hinted that Bifinity’s recent announcement that it has partnered with Eqonex could be cause for concern for UK regulators.

According to the FCA, the partnership between Bifinity and Eqonex effectively meant that under UK money laundering regulations, certain individuals and entities within the Binance group can now be considered “beneficial owners” of Digivault, the British subsidiary of Diginex and the custody solution of Eqonex. The financial watchdog said it “did not have the authority to assess the suitability and ownership” of Binance Group entities prior to the partnership, but did has already warned the public about his concerns with the crypto company.

As part of its strategic partnership with Eqonex, Bifinity agreed to provide a convertible loan of $36 million aimed at expanding products from companies including Digivault. According to the FCA, the loan grants Bifinity “specific contractual rights” over Eqonex, likely implying that the deal may allow a Binance group company – in this case, Bifinity – to conduct regulated crypto business in the Kingdom. -Uni through Eqonex’s connection to Digivault – ranging against opinion of June 2021 of the regulator to cease its activities.

“The FCA may take action to suspend or cancel the registration of a crypto-asset business if it is not satisfied that the business or its beneficial owner is fit and proper,” the regulator said. “The FCA also has the power to suspend or cancel the registration of a company’s crypto-assets on a number of grounds, including where a company has failed to comply with obligations under the money laundering.”

Crypto exchange Binance said in June 2021 that the FCA notice would have “no direct impact” on its services, stating that Binance Markets was “a separate legal entity.” Binance CEO Changpeng Zhao announced later in December that the exchange was consider applying for an FCA license and hoped to operate in the UK within 18 months.

Related: Binance’s Paysafe deal worries UK financial watchdog

To become a registered crypto business in the UK, businesses must operate in accordance with UK anti-money laundering and anti-terrorist financing regulations. Cointelegraph reported that in February, 32 companies received FCA Approval as Registered Crypto-Asset Service Providers out of about 200 who applied.