Barclays has stopped UK customers from transferring funds to Binance after the Financial Conduct Authority last month said the digital asset exchange was not authorised to undertake crypto business within UK borders.
The London-based bank on Monday notified clients of the prohibition on debit and credit payments to Binance, which it said would start immediately and was intended “to help to keep your money safe”.
“This action does not impact on the ability for customers to withdraw funds from Binance,” the bank said. “The decision has been taken following the FCA warning to consumers.”
Barclays’ decision comes as UK lenders are grappling with the extent to which they should let clients move funds to and from crypto exchanges over concerns about a lack of regulatory oversight over the sector and widely varying compliance standards among exchanges.
The UK regulator last month issued a formal consumer warning about Binance, banned it from regulated financial activities — such as arranging conventional investment deals — and said it did not have authorisation to conduct crypto operations in the UK.
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Binance has struggled at times to keep its compliance function on par with its sprawling operations — which include trading in digital coins, options, savings accounts and stock tokens — in the view of several people directly familiar with the group’s practices, the Financial Times reported last week.
An executive at a payments company that helped connect Binance to the broader financial market before cutting ties with the group told the FT that Binance “talks a big game on anti-money laundering and know-your-customer” rules, but was “resistant to throwing human resources at compliance issues”.
Binance has said that it is “categorically untrue” that it lacks sufficient compliance capacity and that it takes its “legal obligations very seriously”. It said that it was “disappointed that Barclays appears to have taken unilateral action” and that it “would welcome a dialogue with Barclays to discuss any concerns that they have”.
The group, which lacks a formal headquarters, connects to the conventional financial market through a series of global affiliates. In Europe, entities have forged deals with UK-based payments providers including Checkout.com and Clear Junction, that allows hard currencies to flow on to and off of its sprawling platform.
NatWest last week said it had blocked payments to “a small number of cryptocurrency asset firms where we have seen particularly significant levels of fraud-related harm for our customers”. Santander said it was “reviewing” its position on “payments to unregulated cryptocurrency exchanges.”
Global regulators have focused attention on controlling “on ramps and off ramps” where money passes between cryptocurrencies and the traditional financial system, placing banks at the heart of efforts to protect consumers from fraud and prevent money laundering.
The attention around Binance has brought fresh signs that banks are scrutinising payments by their retail customers to exchanges. Just five crypto companies have successfully registered with the FCA for anti-money laundering supervision — something that is required to run a cryptoasset business in the UK — while several dozen are still waiting on approval.
Roughly 2.3m people in the UK hold cryptocurrencies, according to the FCA, and the vast majority use offshore exchanges such as Binance for their dealings. These non-UK platforms typically do not have to register with the FCA, even if they have UK customers, adding to the complex situation banks have to navigate.
HSBC last week said it would not comment on individual crypto exchanges but was “closely following developments and changing regulation in these markets”. Lloyds said it did not allow crypto payments on credit cards and subjected all transactions to “robust fraud monitoring processes . . . on a case-by-case basis” and that this approach applied to Binance.
In addition to blocking certain firms, NatWest said it had lowered the daily limit on how much money customers could send to cryptocurrency exchanges after a “high level of cryptocurrency investment scams”.
Additional reporting by Adam Samson