The Financial Conduct Authority (FCA), the top financial authority in the United Kingdom, has raised concerns over Binance’s recent partnership with Paysafe, a retail payment processor.
The U.K. financial watchdog said the latest partnership of Binance gives it access to the extensive retail payments network via Faster Payment Services, a critical service that was discontinued for the crypto exchange citing regulatory concerns. The FCA ordered Binance to halt all its services in June. Prominent banks such as Barclays have withdrawn their support to the exchange, resulting in the suspension of banking services.
Binance managed to facilitate its consumers with Sterling deposits again and reopened Single Euro Payments Area transfers on Jan. 26 after its partnership with Paysafe. This has become a cause for concern for the financial watchdog, which has deemed the exchange as a “significant risk.” However, the financial regulator also noted that it has little say in these kinds of partnerships, reported the Financial Times.
“Paysafe is aware of our concerns and is subject to close ongoing supervision consistent with our approach for firms of its size. We cannot comment further,” FCA noted.
The crypto exchange has maintained that it has been working with the FCA post-warnings to become a compliant exchange in the country. Paysafe addressed the regulatory concerns and told Cointelegraph:
"We take our regulatory obligations extremely seriously and comply with the highest industry standards. We have performed thorough due diligence on Binance to ensure that they also comply with these high standards, as we do with all merchant partners."
Binance’s regulatory trouble in 2021 started in the U.K where regulators issued multiple compliance warnings against the crypto exchange followed by an order to shut down operations. This was followed by similar regulatory warnings from Hong Kong, Thailand, the Cayman Islands, Japan and others. The crypto exchange giant managed to mend its relationship in several Asian nations by the end of the year.
Crypto regulatory frameworks in the U.K. are yet to be finalized, but crypto trading is not prohibited. However, the lack of a clear framework makes crypto firms rely on guidelines from regulators, which keep changing from time to time. The current regulatory discussion in the U.K. revolves around decentralized finance lending and staking. Nevertheless, lawmakers in the country are divided; some want to make the U.K. a crypto hub, while others continue to make a case against it.