As the storm of regulatory scrutiny engulfs cryptocurrency exchange giant Binance, the ripples of its troubles are now being felt by payment card leaders Mastercard and Visa, who are cutting ties with the embattled platform.
This seismic development underscores the growing wariness of traditional financial institutions to collaborate with Binance, given the intense regulatory pressure it faces and the broader concerns surrounding financial compliance within the cryptocurrency sector.
In a strategic move, Mastercard is set to discontinue Binance-branded cards in Latin America and the Middle East. These cards enabled customers to utilize their cryptocurrencies for purchasing goods. Binance announced this pivotal shift via X, the company formerly known as Twitter.
Binance Customer Support explained on Twitter, “The product, much like conventional debit cards, has served Binance users in covering daily essentials, but in this case, the cards are funded with crypto assets.” The impact, however, seems to be limited, with only a minor fraction of users (less than 1% in the mentioned markets) being affected. The deadline for the users of this product to transition away is September 21, 2023, after which the card will cease to be functional.
However, Binance remains resilient in the face of this change, assuring users worldwide that their Binance accounts remain unaffected. The company also highlights its alternative solution, Binance Pay, a cutting-edge contactless cryptocurrency payment technology that facilitates shopping and secure crypto transfers.
Mastercard corroborated the move, confirming the conclusion of its partnership with Binance. The spokesperson told CNBC that, starting from September 22, the four Binance co-branded Mastercard card programs (operating in Argentina, Brazil, Colombia, and Bahrain) will no longer be operational. This discontinuation period provides cardholders the opportunity to liquidate any crypto holdings from their Binance wallet.
Meanwhile, Visa has also decided to distance itself from Binance, ending a similar card collaboration. Visa ceased the issuance of new co-branded cards with Binance in Europe since July.
Binance and Visa refrained from immediate comment when reached out to by CNBC.
This series of events echoes the broader industry’s tepid response to cryptocurrencies, reflecting the prevailing reservations among financial service entities.
Mastercard had exhibited a growing acceptance of crypto in recent times. In October 2021, the company opened the doors for any bank or merchant to offer crypto services. Moreover, it launched a product allowing banks to assess the risk of criminal activities related to crypto merchants and initiated crypto trading offerings.
Clarifying their stance, Mastercard emphasized that discontinuing the collaboration with Binance does not impact their dedication to promoting and safeguarding digital assets.
However, for Binance, the heat from regulators continues to rise. Accused by the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission of 13 charges, including the mingling of customer funds with its own, Binance has become a focal point of regulatory backlash. These charges parallel allegations made against the now defunct crypto exchange FTX, which has been accused of similar financial missteps.
Binance vehemently denies these allegations and has even filed a protective order against the SEC, claiming that the regulator’s information requests are excessive and unjustly burdensome.
The troubles for Binance don’t end there. Recent reports indicate that Checkout.com has severed its business ties with Binance due to regulatory actions, inquiries, and concerns over the firm’s compliance controls, anti-money laundering efforts, and sanctions.
