The Financial Conduct Authority (FCA) in the UK has imposed restrictions on Rebuilding Society, a Leeds-based lender that recently partnered with Binance for financial promotions compliance. The directive, issued on Tuesday, requires Rebuilding Society to withdraw approvals given to unauthorized entities via its financial promotions approval service by Wednesday evening.
The new FCA mandate is part of a regulatory regime that came into effect on October 8, 2023. This regime oversees cryptocurrency promotions across multiple platforms, including Binance's global website and Coinbase (NASDAQ:COIN)'s app. Non-compliance with these regulations is considered a criminal offense under section 21 of the UK's Financial Services and Markets Act 2000 and could potentially lead to an unlimited fine.
Binance's strategy for the UK market is now uncertain due to these restrictions. The FCA has barred Rebuilding Society from approving crypto-related financial promotions, impacting their joint efforts to market spot trading, nonfungible tokens, and other services. As Binance is unregistered with the FCA, it had relied on Rebuilding Society for compliance with the FCA's new marketing regime. This has led to the discontinuation of referral bonuses.
In addition to these restrictions, Rebuilding Society is required to notify its clients, including Binance, about these changes. Amidst this uncertainty, companies like OKX and MoonPay have pledged compliance with the FCA rules.
Regulated entities such as Archax are aiding cryptocurrency exchanges like Coinbase and OKX with their UK communications. Meanwhile, the birth of Chainalysis was noted following the Mt. Gox collapse and Binance remains silent on projects funded by its $1B crypto recovery fund.
Adding to the complexity of the situation, Rebuilding Society's financial performance has been under scrutiny. According to InvestingPro data, the company's market cap is $13.64 million and its adjusted P/E ratio for Q4 2023 is 0.67, indicating a potentially undervalued stock. The firm's revenue for the same period was $5678.25 million, with a growth rate of 16.88%, which, as per InvestingPro Tips, indicates accelerating revenue growth. However, the company's gross profit margin is considered weak, which could be a cause for concern for investors. For more insights, visit InvestingPro for additional tips and metrics.
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