Binance suspends sterling transfers after crypto crash

British customers of the world’s largest cryptocurrency exchange face being unable to withdraw their money from the platform for months.

Binance has been forced to suspend withdrawals to UK bank accounts following pressure from regulators on the cryptocurrency giant’s payments provider.

Paysafe said the regulatory environment made it “too challenging” to process payments for the business and would close it in May.

Binance told customers this week that Paysafe will no longer handle card transactions and wire transfers in sterling from May 22. It has suspended its services for new users from Monday.

The move will effectively leave no way for UK customers to withdraw pounds from the platform into their bank accounts after that date, although it is understood the companies are working on a way to keep some payments flowing.

It comes a year after the City watchdog criticized Paysafe for working with Binance.

The Financial Conduct Authority (FCA) has raised repeated concerns about Binance, whose advisory board includes Lord Vaizey of Didcot, the former digital minister. The regulator has banned Binance’s UK business from operating, but does not have the power to ban its global website in the UK.

However, the watchdog has said: “The FCA considers that the firm is not capable of being effectively supervised”.

Binance has had repeated issues with payment partners. It suspended dollar transfers to bank accounts last month due to changes from bank provider Signature.

Banks and finance companies are increasingly weary of working with cryptocurrency businesses, as regulators around the world scrutinize the sector more.

On Tuesday, NatWest said it is introducing a £1,000 daily cap and a £5,000 monthly cap on transfers to all cryptocurrency exchanges. The bank said the decision was driven by “the increasing risk from fraudsters”.

A Paysafe spokesperson said: “We have agreed with Binance to stop offering our built-in wallet solution to their UK customers. We have concluded that the UK regulatory environment in relation to crypto is too challenging to offer this service at this time and therefore this is a prudent decision on our part taken with an abundance of caution.

“Paysafe and Binance are now working to mutually implement an orderly and fair process to terminate this service over the next 60 days.”

Last year, the FCA said it had made Paysafe aware of its concerns about doing business with Binance, saying: “We received notification of this business partnership but have limited rights to object to arrangements of this nature.”

Paysafe has an FCA payments license and, unlike Binance, is on the FCA’s crypto asset register, which requires certain assurances about money laundering controls. It is unclear whether the regulator put pressure on Paysafe to stop working with the company.

The FCA was contacted for comment.

Binance said: “This change affects less than 1pc of Binance users. However, we know that these services are valued by our users and our team is working hard to find an alternative solution for them. We will share updates on this as and when we can.

“In the meantime, all methods of depositing and withdrawing other fiat currencies as well as buying and selling crypto on Binance.com remain unaffected, including bank transfer with one of the other fiat currencies supported by Binance, and buying and selling crypto directly via credit or debit card.”

A Paysafe spokesman said: “While we realize this is disappointing, the UK part of our business with Binance is small and we are delighted to continue working with them in Europe and Latin America where they are expanding.”