Binance co-founder: UK is ‘most stressful’ country for crypto regulation

Global regulators are inching closer to drawing up a complete set of rules for the crypto sector. In a 10 October vote,  European Union lawmakers overwhelmingly backed the start of formal bloc-wide laws to regulate markets in crypto assets, also known as MiCA.

In Britain, the FCA is still in its recruitment and learning stage. It has still not settled on a permanent director for its digital-assets division, and recently ran a so-called crypto sprint, designed to better educate staff on 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 “not capable” of supervision by regulators and posed a “significant risk to consumers”.

READ Lisa Cameron MP: ‘You can’t keep your head in the sand and hope crypto goes away’

Yi, who now leads Binance’s venture capital arm Binance Labs, put the firm’s regulatory woes down to it being a young company with “just a few hundred people globally” at the time of application, and specifically without enough UK-based staff with compliance backgrounds.

It was “not professional” enough in the language it used when applying with the regulator, she said, adding that the UK has “high standards” for regulatory approval.

Part of the reason Britain has been such a headache for Binance, she continued, was the UK’s influence on the world stage in financial services, causing her to fear after the FCA issued its warning letter that “another region will follow”.

Binance has since been recruiting regulatory talent apace. Earlier this year, it hired Steven McWhirter, a former senior FCA executive, as its global director of regulatory policy.

READ Binance poaches Kraken compliance boss as crypto readies for regulation

McWhirter spent more than nine years at the FCA, latterly as a strategy and engagement manager in its 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 recently, in early September.

Binance took a significant hit to its consumer protection credentials last week, after admitting that hackers had stolen about $568m worth of BNB, its cryptocurrency.

Blockchain security company SlowMist has since said the attacker only managed to take about $110m because Binance’s blockchain, BNB Chain, was shut down before the remaining $430m could be converted to other crypto tokens.

CZ said in a tweet that the company estimates the impact of the theft to be between $100m and $110m.

The FCA declined to comment.

To contact the author of this story with feedback or news, email Alex Daniel