The cryptocurrency market has shrugged off news of Britain’s financial watchdog banning one of the world’s largest Bitcoin (BTC-USD) exchanges from operating in the country.
Over the weekend the Financial Conduct Authority (FCA) ordered Binance Markets to remove all advertising and financial promotions by Wednesday 30 June. In one of the most significant moves by a regulator to date, the FCA said that the firm must not carry out any regulated activities in Britain without prior consent.
Binance, which was founded by Canadian-Chinese developer Changpeng Zhao, is now required to make clear on its website, social media platforms, and all other communications that it is no longer permitted to operate in the UK.
Despite the ban, Bitcoin rose more than 5% on Monday to $35,017 (£25,188), although it is still lower than at the start of the month following China’s recent crackdown on bitcoin miners.
The wider cryptocurrency market also pushed ahead, with ethereum (ETH-USD), the world’s second largest coin, up 10% as average transaction fees on the coin dropped to their lowest since December 2020. Elon Musk-favourite dogecoin (DOGE-USD) also climbed 3.4%.
According to CoinGecko, the broad crypto space was up around 8% to $1.43tn on Monday morning.
“We’re seeing the $30,000 level on bitcoin being defended quite well with a number of tests at that level over the past month,” Vijay Ayyar, head of Asia-Pacific at crypto exchange Luno Pte, told Bloomberg.
“We saw a lot of downward pressure on prices being defended, so this looks quite bullish at this point.”
It comes amid a crackdown on the cryptocurrency sector as money laundering and fraud cases rise globally. It also comes just days after the Japanese financial regulator issued a consumer warning against Binance.
US and German regulators have also raised concerns over the firm’s activities in the past.
Since the start of this year, crypto-related businesses must register with the FCA before doing business in the UK, however, most firms have been granted “temporary registration” until July. Earlier this month, the watchdog said that just five firms had registered, and that the majority were not yet compliant.
On Sunday, Binance said on Twitter: “Binance Markets ‘does not offer any products or services via the Binance.com website’. The Binance Group acquired BML May 2020 and has not yet launched its UK business or used its FCA regulatory permissions.”
Binance Group is currently based in the Cayman Islands, while Binance Markets Limited is an affiliate firm based in London.
Watch: What is bitcoin?
A spokesman for the FCA said: “A significantly high number of cryptoasset businesses are not meeting the required standards under the money laundering regulations, which has resulted in an unprecedented number of businesses withdrawing their applications.
“The action taken on Binance Markets Limited has been in train for some time.”
Of the firms assessed, more than 90% have withdrawn applications following the FCA’s intervention.
Cryptos have been boosted by institutional support in recent months. As well as Tesla (TSLA), several organisations, including MicroStrategy (MSTR), have invested billions of dollars into cryptocurrencies and traditional financial firms like PayPal (PYPL) and Goldman Sachs (GS) started to handle the asset on behalf of clients.
However, they have also faced staunch opposition from governments and central banks, which have been keen to regulate digital currencies.
Bank of England (BoE) governor Andrew Bailey said that digital currencies will not get a regulatory “free pass” in the future, despite their potential for innovation, doubling down on his earlier position that bitcoin is not money, and has no intrinsic value because it has no backing.
“First and foremost is the potential for consumer harm, both through fraudulent activity and from losses sustained from crypto trading,” Laith Khalaf, financial analyst at AJ Bell, said.
“FCA data released last week showed that over two million Britons now hold crypto, and while the majority appeared to be taking a sensible and measured approach, 14% had borrowed money to fund their investment, leaving them at high risk of suffering losses and being saddled with a nasty debt hangover.”
He added: “Financial watchdogs will also be keeping an eye on systemic risks that might emerge from crypto markets. The financial crisis was a wake-up call to governments across the world that even with considerable oversight, financial markets can build up a head of steam that leaves them hurtling towards a cliff edge.
“Crypto markets aren’t big enough to pose a serious systemic threat right now, but should they continue to grow and proliferate, regulators won’t be complacent on this front.
Watch: What are the risks of investing in cryptocurrency?