The cryptocurrency community has been in a bit of a frenzy these last few months. Elon Musk announced that he would no longer accept Bitcoin as a payment method for Tesla purchases, which meant that the cryptocurrency took a big hit and has continually declined since Musk’s announcements. Though now that the storm has passed somewhat, it seems another spanner has been thrown in the works as U.K. bank Barclays says it will no longer allow its customers to make use of their bank-issued debit and credit cards to make payments to Binance, a popular crypto exchange. This could drastically affect the future of crypto payments.
Though this announcement from Barclays came as a shock to a few, it caused some concern for many customers who use Binance. A lot of news and misinformation has been circulating regarding this decision made by Barclays. To find out the truth about what’s happening and what this Binance stoppage might mean, keep reading!
Barclays Blocks Binance Payments
On the 5th of July 2021, Barclays (a leading banking institution in the United Kingdom) sent out a message to their customers notifying them about blocking any further payments to Binance because they are trying to help customers keep their money safe. This announcement comes following the statement made by the U.K. Financial Conduct Authority (FCA) that stated that Binance was not permitted to conduct regulated activities in the U.K.
After receiving the message from Barclays, disgruntled customers took to social media to share their concerns via tweets in hopes of gaining more clarity on the situation, only to receive an almost copy-paste message from the Barclays U.K. Help official Twitter account. However, Barclays has reassured its customers that they can still withdraw funds from Binance but made no mention of instant transfers, so there’s still some confusion surrounding that issue.
Barclays Not Alone in Block Binance
Barclays is not the only U.K bank to take a stand against crypto, NatWest has issued a similar block recently to limit daily transfers to cryptocurrency exchanges and another U.K. bank, TSB, said it might follow suit. The recent block established by Barclays is said to affect more than 24 million customers worldwide as they are now unable to move their money to Binance to purchase cryptocurrencies. Although Binance doesn’t have any offices in the U.K., it uses payment processors to route fiat money to its platform from its customers. It has now been reported that these affiliates will no longer be able to process these payments.
To understand the impact this has had, we need to understand how big Binance actually is. According to CryptoCompare, data shows that Binance’s trading volumes in June of this year were $662 billion. Almost ten times greater than that of July 2020. Data also shows that on a random day in May, the daily volumes reached $92 billion. Essentially, Binance is extremely popular, and their U.K. market is no exception, with mobile data firm Sensor Tower reporting that the Binance app has been downloaded 2.2 million times, 1.8 million times in 2021 alone.
Why Is Binance Under Scrutiny?
For those who are still confused about why there is this sudden drastic action against Binance, the answer is simple, sort of. Binance has been under scrutiny for some time now, and here’s why!
Binance is coming under scrutiny due to regulators. Britain’s Financial Conduct Authority (FCA) being one of them. Generally, crypto trading is unregulated in Britain, but activities that include offering crypto derivatives require permission.
Regulators have of late become increasingly concerned over the standard of the anti-money laundering checks that are in place at crypto exchanges and the risks that consumers face when it comes to trading cryptocurrencies.
Binance is facing criminal complaints that have been filed in Thailand. Binance seems to have no authorization to operate in Thailand, as reported by the Thai Securities and Exchange Commission (SEC), yet they were doing just that. Similar complaints and warnings have been made against Binance in Canada, the Cayman Islands, Japan, and even South Africa. Germany’s regulators reported in April that Binance was at risk of being fined due to offering tokens that are linked to stocks. Not to mention that Binance was also put under investigation in May by the US Justice Department and Internal Revenue Service. It seems the charges and complaints keep piling where Binance is concerned.
Unsurprisingly, this has been met with some scrutiny. Many are questioning why there is so much being done to regulate Binance when other cryptocurrency exchanges based elsewhere are not put under such scrutiny.
A Binance spokesperson addressed the allegations by stating that Binance does take its compliance obligations seriously and will follow all regulatory requirements in any country it operates. Following this, Binance has also announced that it would adopt Traveller, making it one of the first crypto exchanges to do so in an effort to better comply with regulations. Traveller is a tool that automates the Financial Action Task Forces (FAFT) Travel Rule compliance. Binance also hired a former top regulator (and interim head of the U.S. Comptroller of the Currency) at the end of April.
All that’s left now is to see whether Binance will comply, and hope for the best where Binance and those using the crypto exchange are concerned.