Clear Junction, a global payment solution, decides to distance itself from Binance after the crypto exchange was hit with a flurry of negative news.
FCA’s Consumer Warning
Another partner has decided to steer clear from Binance, taking cue from Barclays and Santander. Adam Samson, the Markets News Editor of Financial Times tweeted on July 12, 2021 announcing that one of Binance’s key payment partners, Clear Junction, will be suspending euro and pound payments. This suspension includes both the deposits and withdrawals to the crypto trading platform.
The banking and payment solutions provider is licensed by the Financial Conduct Authority in the United Kingdom. Cross Junction provides cross border payments and banking with presence across the UK and Europe.
Lately, Binance has been facing numerous regulatory hurdles in various jurisdictions. The situation seems unlikely to abate as regulators around the world are closely regulating crypto space.
Despite Binance’s response to clarify the position to distance itself from Binance Markets Limited as separate entities, banks and payment solution providers are taking extra precautions.
Barclays Bank announced that it will stop all payments to Binance early this month. The ban took effect on June 5, 2021. Santander was the next bank to follow suit by enforcing a ban on payment effective from June 8.
This came after the UK’s Financial Conduct Authority (FCA) made an announcement on June 26. It named Binance Markets Limited as an institution that comes within their jurisdiction that does not have the permission to conduct regulated activities.
What this Entails for Crypto Investors
Binance’s users are finding it harder to conduct any trade on the platform. They are now forced to source for alternative platforms for seamless transactions. The choice falls on platforms that are regulated and compliant.
The recent crackdown on Binance has benefited alternative platforms such as Bitstamp, Kraken and Gemini. In an article by CNBC, Bitstamp’s customers have grown by 138% after the FCA’s announcement.
The crackdown should not be seen as an attempt to prevent crypto enthusiasts from participating in crypto related activities, but rather it is a call for strict enforcement of existing rules.
In response, Binance has affirmed its position on regulations. It remains committed and compliant to local regulatory requirements. Binance, being the biggest crypto exchange platform in the world, will continue to be under intense scrutiny merely because of the scale of their operation.
Any regulatory framework will demand that Binance takes immediate steps to comply and to obtain the necessary licenses. Binance has incorporated a separate entity in America through Binance.Us.
This is a measure to meet the local regulatory demands. Binance would likely find itself having to do the same for other jurisdictions.
Meeting regulatory requirements may be time consuming as immediate steps must be taken to resolve the current impasse. Binance must engage in just like what it did for Binance.Us to structure a regulatory framework.
Until this matter is resolved, Binance will have to ensure that their existing operations do not contravene any local restrictions as it would jeopardize the current application.
The Crypto Journey
Binance will be celebrating its 4 year anniversary. Changpeng Zhao (CZ), the founder and Chief Executive Officer of Binance has referred to the entire process as a ‘journey’.
Crypto is relatively new and it has its own set of intricacies which is unlike other asset classes. The rate of adoption is fast and regulation is trying to match the pace. The entire experience of regulating the crypto space is also relatively new to the regulators.
Instead of being a solution, regulations often end up being reactive. This journey would likely continue until the entire ecosystem matures. Institutions that are prepared to push boundaries and recognise the innovation that the market offers may be new alliances in the future.
Source : bsc.news
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