Binance Faces Setback as it Loses Euro Banking Partner

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By A D

The journey of Binance, the world’s largest cryptocurrency exchange, has been marred by regulatory battles and challenges in recent times.

Binance, the world’s largest cryptocurrency exchange, has announced that its current euro banking partner, Paysafe Payment Solutions, will no longer support the exchange after September 25, 2023. This decision by Paysafe comes amid growing regulatory challenges faced by the exchange, including a recent lawsuit filed by the US Securities and Exchange Commission (SEC) accusing the exchange and its CEO of violating federal securities laws.

Paysafe Payment Solutions has communicated to Binance users that they will need to update their banking details for euro deposits and withdrawals conducted through SEPA bank transfer. Binance is actively working on finding a new service provider for these services, although the specific provider has not been disclosed.

It is worth noting that Paysafe has decided to cease offering its embedded wallet solution to Binance across the European region, and they have already begun the process of withdrawing their services in the UK. This decision follows a strategic review conducted by Paysafe.

Binance has been facing regulatory backlash in several countries, leading to strategic changes in its operations. The exchange recently announced its retreat from the Netherlands and Cyprus and has sought to cancel permissions in the UK. Additionally, Belgium’s market watchdog has issued an order for the exchange to cease offering crypto services in the country.

Read: Binance exits Netherlands, asks users to withdraw assets

The UK’s financial regulator had expressed concerns about Binance’s access to the country’s primary payments network through its partnership with Paysafe. This occurred after Binance secured the Paysafe deal, prompting concerns about potential risks associated with the exchange’s activities.

Despite the upcoming change in its euro banking partner, Binance has assured its users that all current methods of depositing and withdrawing other fiat currencies, as well as trading cryptocurrencies on Binance.com, will remain unaffected. Binance continues to navigate the evolving regulatory landscape while ensuring the smooth operation of its platform for its global user base.

Binance’s Battle with Regulatory Challenges

In 2023, Binance has encountered various challenges and regulatory issues. As it confronts the US Securities and Exchange Commission and withdraws from multiple European markets, the exchange has recently exited the Netherlands due to its failure to secure a license from the Dutch central bank. Additionally, Binance has faced an investigation in France regarding its anti-money laundering procedures.

Read: The Big Binance Lawsuit

Binance is now making preparations to leave Austria. Binance Austria GmbH, its subsidiary, has withdrawn its license application from the Austrian Financial Market Authority (FMA). Binance had previously announced plans to expand into Austria in 2022 and sought to register as a “service provider in relation to virtual currencies.”

Amidst these developments, Binance has been actively working towards achieving compliance with European regulations, particularly the Markets in Cryptoassets (MiCA) Regulation. Binance officials have expressed their commitment to fulfilling obligations in compliance with applicable laws across all jurisdictions where Binance operates. The MiCA Regulation, which aims to support European financial stability and consumer protection, was unanimously passed by the European Union in May 2023, with enforcement expected to commence in 2024.

In line with its preparations for MiCA, Binance has taken measures such as delisting privacy coins and withdrawing license applications in European countries like the United Kingdom, the Netherlands, and Cyprus. Binance has attributed these decisions to its compliance processes and efforts to focus on larger markets such as France, Italy, and Spain.

Initially, Binance planned to delist privacy tokens for users in France, Italy, Spain, and Poland, restricting their ability to buy or sell 12 specific privacy tokens starting from June 26. However, emails sent to users indicate that certain privacy tokens, including BEAM, XMR, MOB, FIRO, and ZEN, are still subject to the restrictions.

However, amidst the regulatory challenges, Binance has also achieved positive developments. In June 2023, the exchange successfully launched a regulated digital asset platform in Kazakhstan as part of its global expansion efforts. The exchange obtained a permanent license from Kazakhstan’s AIFC Financial Services Authority (AFSA) in 2022, allowing it to operate a digital asset platform and provide custodial services within the jurisdiction of the Astana International Financial Center (AIFC).

Overall, Binance’s recent actions reflect that it has withdrawn from markets where licenses were not obtained, prioritized compliance with MiCA and other regulations, and emphasized its commitment to meeting legal requirements and industry standards in all jurisdictions of operation.

Decline in Binance’s Market Share and BNB Price

The critical support level at $231.2 is being tested by the price of Binance Coin (BNB), as negative developments within the Binance ecosystem continue to hinder bullish recovery attempts. Since June 5, when the US Securities and Exchange Commission (SEC) filed a lawsuit against Binance and its CEO, Changpeng Zhao, the token has experienced a decline of approximately 25%. The downswing began with a 10% slump and has extended by an additional 15%, resulting in BNB being trapped within a crucial zone between $256.2 and $231.2.

Similar to a previous occurrence in December, when investor trust in centralised platforms was affected by the actions of FTX exchange, the current situation has fueled a continuation of the bear market.

In order for the price of BNB to recover, a shift in focus is required from the bearish fundamentals presented in Binance’s official announcement of a lost banking partner. A positive indication would be a decisive daily candlestick close above the upper boundary of the consolidation zone at $256.2. However, true relief for Binance Coin would only come with a daily close above $348.4, a level last seen in mid-April.

Binance’s regulatory battles extend beyond the United States, as the exchange has also withdrawn from the UK, Cyprus, and the Netherlands. Belgium has recently joined the list of countries opposing Binance’s operations within its borders, citing violations of laws and the provision of services from non-European Economic Area (EEA) countries.

In terms of market share, Binance experienced a decline to 41.9% in June, down from 43% the previous month. This marks the fourth consecutive monthly decline and the lowest level since August 2022. Nevertheless, Binance remains the largest cryptocurrency exchange globally, with Seychelles-based OKX holding the second-largest market share at 5.44%, followed by American exchange Coinbase at 5.37%.

While the SEC lawsuit may have been a catalyst for the recent softness in the market, Binance’s declining market share began four months ago when the exchange discontinued its no-fee trading promotion for 13 bitcoin spot trading pairs, including BTC-USDT, on March 22.

Binance’s US-based operation, Binance.US, also experienced a decline in market share from 1.18% to 0.39%, as reported by CCData. However, Coinbase maintained a relatively stable market share of 5.37% in June compared to 5.43% in May. Some exchanges, such as DigiFinex, ByBit, and Kraken, saw modest increases in market share during June.

The journey of Binance, the world’s largest cryptocurrency exchange, has been marred by regulatory battles and challenges in recent times. With the loss of its European bank partner and withdrawal from several European markets, Binance finds itself at a critical juncture. However, despite the setbacks, Binance remains the largest cryptocurrency exchange by market share. As the cryptocurrency industry continues to evolve, the fate of Binance and BNB will be shaped by how effectively the exchange can address regulatory hurdles, foster transparency, and maintain its competitive edge.

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