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Highlights
- Binance has come under the UK’s Financial Conduct Authority (FCA) scanner following its deal with Paysafe.
- On 17 February, the world’s leading exchange, resumed its GBP bank transfers through Paysafe.
- However, FCA feels that this deal with the retail payment processing firm would give Binance access to the extensive retail payments network.
The world’s leading cryptocurrency Binance is yet again in the eyes of regulators in the UK. Ever since it was banned by the Financial Conduct Authority (FCA) from operating in the country in June 2021, it has been under constant watch for its projects and deals.
In December, Binance CEO Changpeng Zhao had shown his interest to start the UK operations assuring the regulators that all processes will be in line with the regulations, which would mean making necessary changes to its product offerings. However, once again it has come under the scanner following the Paysafe deal.
The Paysafe Deal
On 17 February, the world’s leading exchange, resumed its GBP bank transfers through Paysafe. The Paysafe’s Faster Payment service will enable the users to deposit and withdraw fiat currencies through bank transfers. The total deposit and withdrawal amount goes up to £147,000 daily with deposit and withdrawal fee set at £2 per transaction.
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However, FCA felt that this deal with the retail payment processing firm would give Binance access to the extensive retail payments network through the Faster Payment Services.
Image source: © 2022 Kalkine Media®
The Faster Payment Service was one of the moot points of debate when it was discontinued for the exchange in June 2021. Leading banks such as Barclays, Santander too had withdrawn its support eventually resulting in the suspension of banking services.
FCA noted that the new deal carries significant risk. The official spokesperson said though they have received a notification of the business partnership, the FCA has limited powers to object to such arrangements.
Also read: How HMRC is trying to tighten its noose around crypto frauds
Regulatory concerns
The UK has been one of the crypto-shy nations in the world. Even though crypto trading is not prohibited, but there is no clear framework for the crypto firms operating in the country.
Recently, the Her Majesty’s Revenue and Customs (HMRC) was toying with the idea of modifying the DeFi lending and staking rules. The HMRC said that as it is still “an evolving process”, it would be difficult to determine the way lenders earn their returns.
While regulators are still not so clear in their approach, crypto adoption in the country is increasing. The Chainalysis report indicates that the crypto transaction in the UK stands at worth US$170 billion (£123 billion), as of June 2021. Meanwhile, FCA has itself highlighted that as many as 2.3 million UK citizens either own or trade in cryptos.
Conclusion
Binance will have to move ahead very carefully in the coming days and will need to make sure that it complies with all the norms set by the FCA. It would need to re-engage with regulators and discuss on what are the points that are troubling the regulators and find a path suitable for everyone.
