The co-founder of Binance says the UK is the “most stressful” country from a crypto regulatory perspective, as the exchange continues to try to persuade the Financial Conduct Authority to allow it to carry out regulated activities in the UK.
He Yi, who co-founded the firm with CEO Changpeng ‘CZ’ Zhao, said Financial news that the exchange had made “communication errors” when they applied for a license to operate in the UK.
Global regulators are closing in on drafting a full set of rules for the crypto sector. In a vote on October 10, EU lawmakers overwhelmingly backed the start of formal bloc-wide laws to regulate crypto-asset markets, also known as MiCA.
In the UK, the FCA is still in its recruitment and learning phase. It still hasn’t decided on a permanent director for its digital assets division and recently ran a so-called crypto sprint, designed to better educate staff about how the sector works as they decide how to police it.
Binance was banned from carrying out regulated activities in the UK last year following a public warning from the regulator. The FCA said Binance was “unable” to be monitored by regulators and posed a “significant risk to consumers”.
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Yi, who now heads Binance’s venture capital arm Binance Labs, put the firm’s regulatory problems down to it being a young company with “only a few hundred people globally” at the time of application, and specifically without enough UK-based staff with a compliance background. .
It was “not professional” enough in the language it used when applying with the regulator, she said, adding that Britain has “high standards” for regulatory approval.
Part of the reason the UK has been such a headache for Binance, she continued, was the UK’s influence on the world stage in financial services, which made her fear after the FCA issued its warning letter that “another region will follow”.
Binance has since been recruiting regulatory talent at a rapid pace. Earlier this year, it hired Steven McWhirter, a former senior FCA chief, as its global director of regulatory policy.
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McWhirter spent more than nine years at FCA, most recently as head of strategy and engagement in the data, technology and innovation unit. He was also a contributor to the Kalifa review of UK fintech.
Yi added that Binance’s local compliance team was engaged in a charm offensive with the regulator, adding that the two parties had held at least one meeting as recently as early September.
Binance took a significant blow to its consumer protections last week, after admitting that hackers had stolen about $568 million of BNB, the cryptocurrency.
Blockchain security company SlowMist has since said that the attacker was only able to take about $110 million because Binance’s blockchain, BNB Chain, was shut down before the remaining $430 million could be converted into other crypto tokens.
CZ said in a tweet that the company is estimating the impact of the theft between $100m and $110m.
The FCA declined to comment.
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