The Financial Conduct Authority (FCA) has said it is “not capable” of supervising cryptocurrency firm Binance.
The watchdog said that the firm failed to provide adequate information on its business operations, corporate structure, and how retail consumers used its products.
In addition, the FCA said Binance’s “complex and high-risk financial products” - which allow consumers to place leveraged bets on cryptocurrencies - were “a significant risk to consumers”.
The news comes after the FCA banned Binance from operating in the UK in June without citing its reasoning.
UK consumers will still be able to trade traditional regulated financial products such as derivatives on Binance’s platform.
Binance, founded in 2017, was the largest cryptocurrency exchange in the world in terms of trading volume as of April 2021 and claims cryptocurrency transaction volumes of £1.5 billion per day.
The firm has recently made senior appointments as part of efforts to step up its regulatory compliance, hiring former US government criminal investigator Greg Monahan to lead its anti-money laundering (AML) operations early this month.
The news comes as established players in financial services enter the cryptocurrency trading platform space; PayPal announced the launch of a new service that enables UK customers to buy, hold, and sell cryptocurrency earlier this week.
“As noted by the FCA, Binance has fully complied with all aspects of its requirements,” said a Binance spokesperson. “We continue to engage with the FCA to resolve any outstanding issues that may exist.”
They added: “As the cryptocurrency ecosystem industry continues to grow and evolve we are committed to working with regulators and policymakers to develop policies that protect consumers, encourage innovation, and move our industry forward.”
An FCA spokesperson said:"Based upon the firm's engagement to date, the FCA considers that the firm is not capable of being effectively supervised. This is of particular concern in the context of the firm's membership of a global group which offers complex and high-risk financial products, which pose a significant risk to consumers."
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