UK Finance Regulatory Body Concerned Over Binance Paysafe Partnership
The United Kingdom’s Financial Conduct Authority (FCA) has expressed its reservations about the recent partnership between Paysafe and cryptocurrency trading platform, Binance.
The FCA did not support the latest deal following the previous incident in July 2021, when Binance failed to access the sterling payment network, paving the way for Paysafe to strike a deal with Binance, albeit to allow Binance to offer limited financial services.
The UK financial regulatory body is concerned that the new partnership gives full access to Binance to the extensive retail payment network, a critical service previously halted following regulatory concern about the crypto exchange platform.
As such, the FCA ordered Binance to stop its services, which prompted the largest bank in the UK, Barclays, to suspend its support for Binance, leading to the discontinuation of banking services to the exchange.
However, Binance did manage to get an alternative for its customers by facilitating Sterling deposits and working towards reopening transfers in January after its partnership with Paysafe. The move may have displeased the FCA, but the financial watchdog is quick to point out that there is a limit to what it can do or say in such a partnership.
But Binance has stated that it is working with the FCA to become more compliant with the law governing financial services in the country.
Where It Went Wrong For Binance
Binance’s ordeal with the UK regulatory body started last year when the FCA issued multiple cautions against Binance, with a subsequent order to halt all operations in the country. Numerous warnings did not help the crypto exchange’s case because there have been many regulatory cautions to Binance from a handful of countries like Hong Kong, Thailand, Japan, and a host of other countries, which came when it was under the spotlight in the United Kingdom.
These and other warnings all stack against Binance, giving it no breathing space to defend itself, much less rectify its supposed wrongdoings. By and large, the FCA’s stance on Binance is due to the previous event where the regulatory body was involved and forced to take the necessary action against Binance.
Despite the happenings, Binance maintained that it is working on becoming more observant of the standing financial regulations relating to the conduct of cryptocurrency exchange businesses.
The UK’s Cryptocurrency Ecosystem
Unlike in other countries where governments have put in place regulations to monitor the activities of cryptocurrency transactions, the UK has yet to conclude its regulatory framework for the crypto industry, and that does not mean crypto transactions are against the law. But the lack of a precise mechanism hinders the industry as exchange platforms are heavily reliant on regulators for constantly changing guidelines so as not to fall foul of the law.
Decision-makers in the country are divided amongst themselves on their opinion of the crypto industry. Some want the UK to be made into a crypto trading hub, while others are totally against legalizing the industry.