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Binance suspends sterling transfers following crypto crackdown

FILE PHOTO: Zhao Changpeng, founder and chief executive officer of Binance, at the Viva Technology conference in Paris, France June 16, 2022. REUTERS/Benoit Tessier/File Photo - REUTERS/Benoit Tessier
FILE PHOTO: Zhao Changpeng, founder and chief executive officer of Binance, at the Viva Technology conference in Paris, France June 16, 2022. REUTERS/Benoit Tessier/File Photo - REUTERS/Benoit Tessier

British customers of the world's biggest cryptocurrency exchange face being unable to withdraw their money from the platform within months.

Binance has been forced to suspend withdrawals to British bank accounts following pressure from regulators on the cryptocurrency giant’s payment provider.

Paysafe said that the regulatory environment made it “too challenging” to process payments for the business and would shut it off in May.

Binance told customers this week that Paysafe would no longer handle card transactions and bank transfers in sterling from May 22. It has suspended the services for new users from Monday.

The move will effectively leave no way for customers in Britain to withdraw pounds from the platform to their bank accounts after that date, although it is understood that the companies are working on a way to keep some payments flowing.

It comes a year after the City watchdog criticised Paysafe for working with Binance.

The Financial Conduct Authority (FCA) has raised repeated concerns about Binance, whose advisory board includes Lord Vaizey of Didcot, the former digital minister. The regulator has banned Binance's UK business from operating but does not have the power to ban its global website in the UK.

However, the watchdog has said: “The FCA considers that the firm is not capable of being effectively supervised”.

Binance has had repeated problems with payments partners. It suspended dollar transfers to bank accounts last month due to changes from its banking provider Signature.

Banks and finance companies are growing increasingly weary of working with cryptocurrency businesses as regulators around the world apply more scrutiny to the sector.

On Tuesday, NatWest said it was introducing a daily cap of £1,000 and monthly cap of £5,000 on transfers to all cryptocurrency exchanges. The bank said the decision was driven by “the increasing risk posed by fraudsters”.

A Paysafe spokesman said: “We have agreed with Binance to cease offering our embedded wallet solution to their customers in the UK. 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.

“Paysafe and Binance are now working to mutually implement an orderly and fair process to terminate this service over the next 60 days."

Last year, the FCA said it had made Paysafe aware of its concerns about doing business with Binance, saying: “We received a notification of this business partnership but have limited powers to object to arrangements of this kind.”

Paysafe has an FCA payments licence and, unlike Binance, is on the FCA’s crypto asset register, which requires certain assurances about money laundering controls. It is unclear if the regulator applied pressure on Paysafe to cease work with the company.

The FCA was contacted for comment.

Binance said: “This change affects less than 1pc of Binance users. However, we know that these services are valued by our users and our team is working hard to find an alternative solution for them. We will share updates on this as and when we are able.

“In the meantime, all methods of depositing and withdrawing other fiat currencies as well as buying and selling crypto on remain unaffected, including bank transfer using one of the other fiat currencies supported by Binance, and buying and selling crypto directly via credit or debit card.”

A Paysafe spokesman said: “While we recognise this is disappointing, the UK portion of our business with Binance is small and we’re pleased to be continuing to work with them in Europe and Latin America where they are expanding.”