Sterling transfers can be halted by Binance

After the cryptocurrency exchange disclosed that it was being forced stop withdrawals and deposits in sterling, Binance is now facing further exclusion from the financial system.

After facing increasing regulatory scrutiny, the business announced that these services were halted for new clients on Monday. It would also be suspended for all its clients on May 22, following a decision made by Paysafe, a payments group, to end its partnership with Binance.

Paysafe stated that it concluded that the UK regulatory environment regarding crypto was too complex to offer this service. This is a prudent decision taken with a lot of caution.

Binance, one of the largest crypto exchanges in the world, is now under increasing pressure from regulators who crack down on its operations as well as the wider market for digital assets.

New York’s financial regulator stopped new issuances of Binance-branded stablecoins last month. Binance stated in February that all dollar bank transfers had been suspended, but did not provide any explanation.

The Financial Conduct Authority in the UK had warned Binance that was “not capable” of effective supervision.

Binance stated that Paysafe’s decision would affect less than 1% of its customers, and that it will “ensure affected users can still access their GBP balances.”

The volatility of cryptocurrencies like bitcoin has been a concern. Watchdogs such as the FCA are concerned that digital assets could be seized by criminals and consumers may suffer sudden losses. The unregulated crypto market is also being used by criminals to launder money and scams.

The November collapse of FTX, another major crypto exchange, and fraud accusations levelled against its founder Sam Bankman–Fried have raised suspicions about digital assets. Also, the failures at Silvergate and Signature, both US banks heavily involved in crypto, have increased caution.

NatWest, one of Britain’s largest banks, stated yesterday that it had witnessed an increase in crypto frauds and was tightening customer limits for payments to digital asset exchanges to a daily limit of PS1,000 and a 30 day ceiling of PS5,000.

It had previously banned Binance payments for over a year, and had previously set different limits for other crypto-exchanges.