Britain’s move to block Binance is boosting rival cryptocurrency exchanges, which have reported a surge in new users in the country recently.
The Financial Conduct Authority recently announced a crackdown on Binance, the world’s top crypto exchange by trading volume, restricting the company from carrying out regulated activities in the U.K.
Binance withdrew its application to register as a licensed crypto asset firm in the U.K. in May due to not meeting anti-money laundering requirements, the markets watchdog said.
While Binance is technically allowed to continue offering crypto trading to Brits, it was ordered by regulators to add a notice to its website saying it is not authorized to operate in the U.K.
For its part, Binance said the measures only targeted its U.K. entity, Binance Markets Limited, and would have no impact on services provided in the country by Binance.com.
But following the FCA’s restrictions, Binance has suffered subsequent setbacks in Britain. Customers were temporarily unable to make card withdrawals due to an issue with the U.K.’s Faster Payments system. Meanwhile, the bank Barclays has blocked customers from sending payments to the crypto exchange.
Binance’s woes in the U.K. have been a boon to its rivals, though, some of which have seen user numbers double since the FCA restrictions were announced.
“We’re seeing an increase in customers in the U.K. coming to us, with no changes in marketing,” Julian Sawyer, CEO of Luxembourg-based exchange Bitstamp, told CNBC.
As of Tuesday, Bitstamp had seen its customers grow 138% since the FCA issued its notice about Binance on June 25. Binance declined to comment on this story when contacted by CNBC.
“I think it’s a flight to safety,” Sawyer added. “If you’re told that the bank you’re with is less secure, you move the money out of the bank and move it into the next bank which is super secure.”
Meanwhile, U.S.-based exchange Kraken has also benefited.
“The percentage share of signups from the U.K. has approximately doubled in the last couple of weeks, compared to signups in Kraken’s other leading markets,” a Kraken spokesperson told CNBC.
Gemini, the digital currency exchange started by Cameron and Tyler Winklevoss, is one of the few companies listed on the FCA’s list of registered crypto asset firms.
“We have seen tremendous user growth as consumers look towards approved firms when entering the market,” Blair Halliday, Gemini’s head of U.K., told CNBC.
“We expect to see exchanges and custodians registered with the FCA continue to gain market share due to the value placed on the approval process,” he added.
Coinbase, America’s largest crypto exchange, declined to comment on this story.
Crypto crackdown
Binance’s woes haven’t been limited to the U.K.
On Tuesday, Binance said it had temporarily suspended euro bank deposits through the Single Euro Payments Area payments scheme, due to “events beyond our control.”
And regulators in Canada, Japan and Thailand have also issued warnings to the company about it operating without authorization.
Binance CEO Changpeng Zhao, better known in the industry as “CZ,” said in a blog post Wednesday the exchange “still has a lot of room to grow” and that it hasn’t always gotten things right.
“Compliance is a journey – especially in new sectors like crypto,” Zhao said, adding Binance is hiring more compliance staff and localizing operations to better meet its regulatory obligations.
It follows a number of steps taken by regulators in China to clamp down on the crypto industry. Several regions in the country have moved to stamp out energy-intensive crypto mining operations, amid concerns over their environmental impact.
Earlier this week, Beijing called for the shutdown of a company suspected of providing software for virtual currency transactions, reiterating its tough stance on crypto.
Digital currencies rallied at the start to the year, with bitcoin jumping to an all-time high of almost $65,000 in April. But they’ve since fallen sharply, with the overall crypto market losing more than $1 trillion in value in the last two months.
