Regulatory Challenges in the Cryptocurrency World: Binance and HTX/Huobi
Binance and the FCA's New Rules
Binance, one of the world's largest cryptocurrency exchanges, made headlines when it declared its compliance with the FCA's latest financial promotion regulations. The exchange did so with great fanfare, having received approval from rebuildingsociety.com for the promotion, which expressed its delight and all the hard work involved in in approving Binance's promotion. However, the excitement was short-lived.
On October 10, the FCA's Register revealed restrictions on rebuildingsociety.com's permissions, stating that:
- The Firm must not approve the content of any financial promotion for a Qualifying Cryptoasset for communication by an unauthorised person.
- The Firm must withdraw any existing approvals of Financial Promotions containing a Qualifying Cryptoasset by October 11, 2023.
- The Firm must notify clients it has engaged or been engaged by to approve the content of any Financial Promotion containing a Qualifying Cryptoasset about the requirements.
- The Firm must withdraw any advertisements or equivalent promotions offering to approve the content of any Financial Promotion containing a Qualifying Cryptoasset for communication by an unauthorised person by October 11, 2023.
- The Firm must confirm in writing to the FCA that it has taken all steps to comply with the requirements by October 13, 2023.
It appeared that rebuildingsociety.com's involvement in approving promotions for Binance's "qualifying cryptoasset" had been short-lived, as indicated by these restrictions.
However, as of October 12, more than 12 hours after the FCA's deadline, the rebuildingsociety.com website still stated that it had approved Binance's financial promotion.
One possible issue for rebuildingsociety.com may have been that the approval pertained to a promotion for products and services offered by Binance. Given Binance's history of FCA warnings and the withdrawal of permissions for its UK subsidiary, the FCA might have had reservations about any approval of a financial promotion by Binance, not just one by rebuildingsociety.com. Notably, the Binance website mentioned that the Binance platform is offered by Nest Services Limited, raising questions about its regulatory status in the UK.
The HTX/Huobi Saga
On the other side of the cryptocurrency spectrum, the decentralised exchange HTX, previously known as Huobi, faced its own troubles as it was struck off the Seychelles corporate register of crypto exchanges. Rachel's article provides detailed insight into the background of this event, including the involvement of various entities and individuals.
In summary, the story of HTX's removal from the Seychelles corporate register is not uncommon in the crypto exchange world. It involves a "technology holding company" with a registered office in Croydon, at a location (a) associated with an astonishing number – over 130,000 – of registered companies, according to Companies House and (b) apparently unoccupied.
The cryptocurrency industry continues to grapple with regulatory challenges. Binance's attempt to navigate the FCA's new financial promotion rules met with regulatory restrictions on the firm it retained to assist it in doing so, raising questions about the compliance of key players in the market. Meanwhile, HTX's removal from the Seychelles corporate register serves as another reminder of the complex and often opaque nature of the cryptocurrency world. As these events unfold, regulatory scrutiny remains a significant aspect of the cryptocurrency landscape, and the industry continues to evolve in response to these challenges.
Link to article