Will NatWest’s move add to Binance woes?

Summary

  • NatWest announced the blocking of all credit and debit card payments to Binance
  • UK Financial Conduct Authority (FCA) declared that Binance Markets Ltd., the global affiliate of Binance, is not authorized to conduct operations in the UK.
  • NatWest assured regular rounds of review for resuming payments on the Binance platform.

National Westminster Bank, popularly known as NatWest Group Plc (LON: NWG), a major retail and commercial bank in the UK, followed the footsteps of its UK banking peers such as Banco Santander (LON: BNC) and Barclays (LON: BARC), to block all credit and debit card payments to Binance, one of the largest crypto trading platforms globally.

Leading banking institutions are no longer allowing customers in the UK to transfer funds on the Binance platform, post UK Financial Conduct Authority’s (FCA) warning in the month of June related to Binance’s illegal operations in the country. As per the new regulations, effective January 2021, cryptocurrency firms intending to operate in the UK need to register with the FCA.

Binance drew out its application for operating as a registered crypto business in mid-May 2021 for unknown reasons. The authority banned Binance Markets Ltd., the global affiliate of Binance, from conducting operations in the country. It also ordered the crypto exchange platform to withdraw all financial and advertising promotion campaigns by 30 June 2021.

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Binance faces heat from across the globe

Binance is facing heat from regulators across the globe, with a majority of it emanating from the UK and Europe. In response, on 16 July 2021, the crypto platform announced an immediate withdrawal of sales of stock tokens. The financial regulatory authority in Italy also alerted users that Binance is not authorized to offer investment services in the country. Single Euro Payments Area (SEPA) also declined all payments to the Cayman Island based crypto platform. 

NatWest’s response to FCA warning

NatWest had earlier capped the per day amount that users could spend on crypto trading due to rising concerns regarding crypto-based investment frauds and scams. As per growing regulatory distrust associated with Binance’s operations globally, the bank had temporarily limited payments to Binance for several weeks in the past. Post the FCA’s announcement, NatWest blocked all outright payments to a number of small crypto firms along with Binance in order to protect customers. The bank also clarified that customers could continue to accept cryptocurrencies as payment. NatWest, however assured regular rounds of review for resuming payments to Binance.

NatWest Bank’s customers used social media platforms to report that they received text messages from the bank informing them that all payments to Binance were blocked until further announcement. The issues associated with regulatory non-compliance and safety of the crypto exchange platform has pushed Binance users in the UK and Europe in a Catch-22 situation, and they are considering options to move their funds out of Binance. The move also spurred discontentment and disappointment among the bank’s crypto user community.

Further shocker for crypto platforms

Another major shocker to the cryptocurrency market in the UK stemmed from Anne Boden, Starling Bank’s CEO, who labelled some cryptocurrency trading platforms as "quite dangerous", in an interview with CNBC. She was reported warning other banking industry players to be extremely vigilant about the security issues associated with using Bitcoin and other cryptocurrencies as a means to make fraudulent payments.

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