by Tom Wilson
LONDON (Reuters) – The U.K. financial watchdog said on Monday it has no power to assess the competence and suitability of new owners of digital asset custodian Digivault after it partnered with Binance.
The deal is between cryptocurrency firm Eqonex, which owns Digivault, and the new payments arm of Binance, the world’s largest cryptocurrency exchange.
The parties previously said the partnership would focus on leveraging Digivault, which is regulated by the UK’s Financial Conduct Authority (FCA).
Under the agreement, Binance’s Bitfinity issued Eqonex a $36 million convertible loan, and will have the power to name Eqonex’s chief executive, vice president of finance and vice president of legal counsel, in addition to two directors, the companies said.
The FCA warned last year that Binance posed significant risk to consumers, ordering it to cease regulated activities. Last month, the body expressed concern about a deal between Binance and British payments company Paysafe that would allow Binance to access a UK payments network.
“FCA is not empowered to assess the competence and suitability of the new beneficial owners or the change of control prior to the completion of the transaction,” the agency said.
The FCA may suspend or deregister cryptocurrency companies if it is not satisfied with the information or in case of non-compliance with money laundering rules.
A Binance spokesperson said he had viewed the FCA’s comments “with interest” and stated that the company will continue the dialogue with the regulator.
(((Reporting by Tom Wilson))
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