The British bank Barclays said in an emailed statement Tuesday to Payments Dive that it was halting U.K. customers' debit and credit payments to the crypto exchange Binance. The decision follows a U.K. Financial Conduct Authority (FCA) "warning to consumers" and is intended "to help keep our customers’ money safe," the statement from Barclays Spokesperson George Shorrock also said.
In response, Binance Spokesperson Hazel Watts said Tuesday that the company was "disappointed" by Barclay's "unilateral action," based on what Binance contends is an "inaccurate understanding of events." Binance is open to a "dialogue with Barclays" to resolve the issue, Watts said in the email.
The move comes after the FCA said in a June 26 press release that Binance Markets is not permitted to undertake any regulated activity in the U.K. A significant number of crypto exchange companies are withdrawing their application with the FCA due to their inability to follow required anti-money laundering (AML) regulations, according to Bloomberg.
Barclays Bank, one of the biggest banks in the U.K., moved to block customers' ability to make card payments to Binance that presumably finance the consumers' crypto purchases and trading on that exchange. The bank cited the FCA consumer warning against the crypto exchange as the basis for its action.
“With effect from today, Barclays intends to stop credit and debit card payments to Binance," a Barclays spokesperson said in an email. "This action does not impact on the ability for customers to withdraw funds from Binance."
The FCA asked Binance Markets, the U.K. crypto arm of the Binance Group, to halt all operations "regulated activity" in the country unless it receives written consent from the regulator, the June 26 press release said.
Cayman Island based Binance last year bought a U.K. crypto wallet company, Swipe.io, for an undisclosed amount, to expand its operations in the country.
Binance 'disappointed' and open for 'dialogue'
"We are disappointed that Barclays appears to have taken unilateral action based on what appears to be an inaccurate understanding of events," Watts said in the email. "They refer their users to an FCA notice that was issued recently addressed to Binance Markets Limited (BML)" but that is a "separate legal entity" and distinct from the products and services offered through the company's www.binance.com site, Watts said in the email.
Binance Markets applied to be registered with the FCA as a crypto exchange program last year. The company withdrew its application on May 17 due to 5MLD, an anti-money laundering directive, as reported by Banking Dive.
The crypto exchange argues that the FCA notice relates to BML, which is a company incorporated in the UK and regulated by the FCA.
"We would welcome a dialogue with Barclays to discuss any concerns that they have and we hope that the above information helps to provide clarity on the matter," Watts said in the email. "We have always taken the security of our users’ money very seriously."
Binance also published a blog post from its CEO Tuesday explaining how it's seeking to "protect users' interests" and meet evolving regulatory requirements.
Scrutiny increases for Binance worldwide
Binance is facing increasing heat from regulators around the world. Regulators from Japan's the Financial Services Agency stated that Binance is operating illegally in the country.
The crypto exchange company also pulled out of Ontario, the most populated province in Canada, to avoid potentially not complying with Ontario securities laws there, according to a report by CoinDesk. The company has "advised Ontario-based users to close out all active positions," and users "will have until the end of the calendar year to withdraw their funds," Watts said in the email to PaymentsDive.
South Korea is considering similar steps for regulating crypto exchanges, asking companies like Binance to register with the country’s Financial Service Commission.
"We take our legal obligations very seriously and engage with regulators and law enforcement in a collaborative fashion," Watts said in the emailed statement. "As the cryptocurrency ecosystem continues to grow and evolve, we are committed to working with regulators and policymakers to shape policies that protect consumers, encourage innovation, and move our industry forward."
Other regulatory hurdles
Binance joins other crypto exchanges in withdrawing applications from the FCA due to intensive AML requirements.
A "significantly high number of crypto asset businesses" are not meeting necessary anti-money laundering standards, an FCA spokesperson told The Wall Street Journal. "Of the firms we’ve assessed to date, over 90% have withdrawn applications following our intervention."
Last month, the FCA said that a significantly high number of cryptocurrency firms are failing to meet U.K. money laundering rules, which resulted in an unprecedented number of crypto firms withdrawing applications to register with the regulator, according to the Financial Times.