In recent months, cryptocurrency investors and enthusiasts have been rocked by a series of sudden collapses of banks that were once seen as friendly to the crypto industry. These banks, which had previously been critical partners for crypto exchanges and firms, have abruptly cut ties with their crypto clients, leaving many investors reeling and uncertain about the future of their investments. According to recent news, crypto exchange giant Binance has decided to suspend sterling deposits and withdrawals for UK users after losing its banking partner.
Paysafe Cut Ties with Binance Following Regulations
On Tuesday, a spokesperson for Binance announced that the world’s largest cryptocurrency exchange would be putting a halt to sterling deposits and withdrawals just one month after it ceased transfers in US dollars.
According to the Binance spokesperson, the exchange’s partner for sterling transfers, Paysafe, has notified them that their services will be discontinued starting May 22, which will affect all of Binance’s customers. As a result, new users have been unable to make sterling transfers since Monday. The spokesperson said:
“Binance will ensure that affected users are still able to access their GBP balances. The change affects less than 1 percent of Binance users.”
Binance Witnesses a Major Setback in the UK
The exact number of clients affected by the cessation of sterling transfers was not disclosed by Binance, which boasts a customer base of over 128 million. However, the company’s spokesperson confirmed they are actively seeking an alternative solution for sterling transfers.
This latest development is just another challenge for Binance in its efforts to gain access to traditional currencies. In fact, last month, the exchange had to suspend all dollar bank transfers due to increased regulatory scrutiny and crackdowns on the crypto industry by U.S. authorities. A Paysafe spokesperson said:
“We have concluded that the UK regulatory environment in relation to crypto is too challenging to offer this service at this time and so this is a prudent decision on our part taken in an abundance of caution.”
Binance, led by billionaire CEO Changpeng Zhao, is currently under investigation by the Justice Department for potential money laundering and sanctions violations. A high-ranking Binance executive informed Bloomberg and The Wall Street Journal last month that the exchange is anticipating penalties as a resolution to the ongoing investigations.
In addition to the regulatory scrutiny, Binance also faced difficulties accessing dollars after the U.S. Securities and Exchange Commission disclosed that it was contemplating taking action against the issuer of its “BUSD” stablecoin. This announcement resulted in approximately $6 billion in outflows earlier this month, posing another obstacle for the exchange.
The split with Binance’s UK banking partner is the latest in a series of setbacks for the exchange after facing increased regulatory scrutiny. While Binance has maintained that it is committed to complying with all relevant regulations, its troubles with banking partners suggest that the exchange may be facing an uphill battle.
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In what is nothing short of a dramatic turn of events, cryptocurrency exchange giant Binance recently announced that it has ceased all Sterling transactions in a bid to protect customers from what it would be calling “excessively high banking fees”. The news came in the wake of a split between the exchange and its UK-based banking partner.
As the news broke, many people speculated about the implications for both Binance and the cryptocurrency industry as a whole. It was clear, however, that the British Sterling transactions were no longer available through the platform effective immediately.
The explanation given by the exchange was that it had decided to halt all Sterling transactions to “protect customers from high banking fees”, as it had recently parted ways with a UK banking partner. This left Binance with few options other than to cease all Sterling transactions until it found a new banking partner.
Furthermore, the exchange stated that any previously pending deposits in Sterling will be accepted as normal, albeit on a slower-than-usual timeline. Notwithstanding, Binance maintained that it is “hard at work” hunting for a new banking partner, and hopefully operations will resume within the “upcoming weeks”.
Despite this, the cryptocurrency industry saw this move by Binance as a further sign that government regulations are preventing innovation within the digital asset industry, as the exchange was one of the few companies providing Sterling services. This, in turn, could hamper the efforts of the industry towards mainstream adoption of cryptocurrencies.
At the end of the day, only time will tell what the long-term implications of Binance shutting down Sterling transactions will be. In the meantime, customers can expect reduced trading activity and raised costs as the exchange works diligently towards finding a new banking partner.