Barclays and Other UK Banks Halt Deposits to Binance Following UK’s FCA Notice

United Kingdom has prevented their clients from making deposits to Binance after the recent announcement by the UK’s Financial Conduct Authority.

Bank’s Unilateral Action on FCA’s Announcement

Barclay’s Bank confirmed in an email to CoinDesk that commencing from July 5, 2021 payment by credit and debit card to Binance will be stopped. This does not affect customers’ ability to withdraw funds from Binance. In a response by Binance on July 6, 2021 through its official Twitter account, the crypto exchange cited the recent decision by some institutions and banks in accordance with the UK’s Financial Conduct Authority’s (FCA) notice to Binance Markets Limited. Binance also announced that the decision was an ‘inaccurate understanding of events’ without specifically naming the institution involved. 

The FCA issued a consumer warning in a statement dated June 26, 2021. This warning pertains to the permission to undertake regulated activity in the UK. In the warning, Binance Markets Limited was specifically mentioned as the entity had failed to comply with the requirements imposed by the FCA and in the absence of a written consent by the FCA, no regulated activities can be carried out. Binance’s above statement said this ban had no effect on the buying and selling of crypto on Binance.com, but UK banks have since banned deposits.

In May, 2021, Starling, a UK based Digital Bank in an unrelated incident also announced that they are barring its customers from making deposits to crypto exchanges. However, this restriction is not specific to Binance and unrelated to the FCA’s recent notice. 

Is the Deposit Ban Justifiable? 

Binance was quick to respond by stating the following reasons why a ban on Binance is not justified. First, the entity that was not regulated and specifically referred to by the FCA is a separate legal entity that is incorporated in the United Kingdom and comes under the purview of the UK’s FCA. Secondly, any concerns about the customers’ funds can be addressed through a dialogue and finally, Binance reaffirms its commitment to be fully compliant to regulations and will shape policies to protect consumers, encourage innovation and advance the industry. 

. If the concern has been the safety of the customers’ funds, a better solution can be achieved through mutual consultation. Hence, the only logical conclusion to be drawn from the bank’s decision must stem from the FCA’s notice. If that is the rationale, then the consumer warning should identify Binance as the company that falls within its scope of jurisdiction and therefore, the FCA’s regulation applies. 

FCA’s statement falls short of identifying Binance as an institution that requires regulatory consent. It has expressly confirmed that Binance Markets Limited is the institution that has a regulatory obligation. T

The quote from the financial watchdog states, ‘Due to the imposition of requirements by the FCA, Binance Markets Limited is not currently permitted to undertake any regulated activities…’  

The pressing question that Barclays should clarify to its customers is, why is an institution that does not fall under the FCA’s jurisdiction prevented from accepting deposits? 

Duty to Protect its Customers

Barclays in justifying the ban said that their action was made with the intention of keeping the customers’ money safe. It did not specifically point towards the conduct of offering regulated services without permission. If the basis has been grounded on non-compliance by Binance, all transactions relating to the crypto exchange including withdrawals should have been banned. 

Although it is admitted that the banks have certain discretion to take steps to protect its consumers, it definitely cannot be overreaching to the extent of limiting legitimate activities by its consumers. 

Binance will continue to face such situations in the future. The trump card lies in the hands of the bank’s customers because it is no longer a regulatory issue. The customers can always demand that the bank lifts the ban or the trade can resume through other financial institutions. It will eventually boil down to a business decision rather than a legal obligation. 

Source : bsc.news