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July 6, 2021

Barclays’ Binance ban: Why does it matter?

By Eric Johansson

UK banking bastion Barclays has banned its customers from transferring funds to bitcoin exchange Binance. However, the question is what impact the restrictions will really have.

Barclays’ Binance ban comes after the Financial Conduct Authority (FCA) issued a warning last month saying the exchange’s UK subsidiary Binance Markets Limited (BML) was not permitted to undertake any regulated activity in the UK, such as offering cryptoasset derivatives or securities.

However, Binance noted that users would still able to trade in cryptocurrencies like bitcoin and ethereum, despite the FCA warning.

“The FCA UK notice has no direct impact on the services provided on Binance.com,” Binance tweeted at the time. “Our relationship with our users has not changed.”

Which brings us to Barclays’ Binance ban. It first came to light after the bank sent out texts to its customers.

“As you’ve made a payment to Binance this year, we wanted to let you know that we’re stopping payments made by credit/debit card to them until further notice,” the texts said.

“This is to help keep your money safe. For further info, please search FCA Binance online. We’re sorry for any disruption this may cause you.”

It is not immediately clear how much Barclays’ Binance ban will actually affect the cryptocurrency exchange as, arguably, only a small fraction of Binance’s UK custom comes from Barclays card holders.

Underscoring the limited impact of Barclays’ ban, Binance told CoinDesk: “This action does not impact on the ability for customers to withdraw funds from Binance.”

Shortly after the news broke, Binance tweeted in response to the Barclays ban: “It’s disappointing to learn that some partners are taking unilateral action to stop servicing Binance users based on what appears to be an inaccurate understanding of events.”

The cryptocurrency company also took issue with the notion that Binance customers’ money wouldn’t be safe with the exchange.

“We have always taken the security of our users’ money very seriously,” Binance said. “In fact, the FCA notice was not about user deposits on Binance.com at all. The FCA notice relates to BML, which is a company incorporated in the UK and regulated by the FCA. BML is a separate legal entity and does not offer any products or services via Binance.com.”

Adding partners were welcome to contact Binance to discuss any concerns, the bitcoin business said it takes its “compliance obligations very seriously, and we are committed to working collaboratively with regulators to shape policies that protect consumers, encourage innovation, and advance the industry.”

Nevertheless, Barclays’ Binance ban highlights how the walls are closing in for bitcoin enthusiasts. Regulators and lawmakers around the globe are expected to introduce stricter cryptocurrency rules in the not too distant future, as detailed by a recent thematic research report from GlobalData.

For example, China, the UK and Iran have either already introduced tougher regulations or flagged for inbound and tougher restrains.