Binance, a cryptocurrency exchange facing various challenges, has experienced a reduction in its collaboration with payment card giants Mastercard and Visa. This occurrence underscores the increasing cautiousness of conventional financial institutions regarding partnerships with Binance. The exchange is currently under significant regulatory examination, and broader apprehensions about financial adherence within the cryptocurrency sector have contributed to this trend.
Binance announced on Thursday through its platform X, formerly known as Twitter, that Mastercard will imminently discontinue the availability of Binance-branded cards in Latin America and the Middle East. These cards enabled customers to utilize their cryptocurrencies for purchasing goods. Binance Customer Support explained on Twitter that these cards, much like standard debit cards, have been utilized by Binance users for covering everyday expenditures. However, what sets them apart is that these cards are funded with crypto assets.
“The impact of this change is minimal, affecting only a small fraction of our user base (less than 1% of users within the specified markets). Those using this product will have until September 21, 2023, to utilize the card before it becomes inactive.” Additionally, the company reassured that Binance accounts globally remain unaffected. Users in applicable regions can continue their crypto-related transactions by utilizing Binance Pay, a secure, borderless, and contactless cryptocurrency payment solution developed by Binance.”
Mastercard has officially verified the conclusion of its partnership with Binance. A spokesperson informed CNBC that starting from September 22, four trial Binance co-branded Mastercard card initiatives, previously active in Argentina, Brazil, Colombia, and Bahrain, will cease to be operational. The Mastercard spokesperson emphasized that this transition allows cardholders a designated period to convert any assets held within their Binance wallets. Importantly, no other crypto card programs will be affected by this change.
In a parallel development, Visa has taken steps to detach itself from Binance. According to a spokesperson, the company terminated a comparable card collaboration with Binance, discontinuing the issuance of new co-branded cards in Europe from July onwards. Both Binance and Visa were unavailable for immediate comment upon contact by CNBC. This situation underscores the prevailing lukewarm reception of the cryptocurrency sector within the broader financial services industry.
Mastercard had shown increasing openness towards cryptocurrency in recent times. Starting from October 2021, the company extended the opportunity for any bank or merchant to provide crypto-related services. In the preceding year, Mastercard introduced a product enabling banks to evaluate the potential criminal risks associated with crypto merchants and permitted banks to facilitate crypto trading. Mastercard clarified that its choice to terminate the collaboration with Binance does not influence its broader dedication to facilitating and safeguarding digital assets, a commitment it remains steadfastly supportive of.
Binance is currently grappling with substantial regulatory scrutiny from entities like the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission. The SEC has lodged 13 charges against both Binance and its CEO, Changpeng Zhao, asserting that the company intermingled billions of dollars from customers with its own funds—a situation akin to the allegations levied against the now defunct cryptocurrency exchange FTX.
Binance refutes the accusations. The company has recently submitted a protective order against the SEC, contending that the regulator’s information requests are excessively expansive and place an undue burden. Additionally, reports have surfaced that Checkout.com terminated its business association with Binance, pointing to reasons such as “regulatory actions and mandates in pertinent jurisdictions,” queries from partners, and reservations about the firm’s anti-money laundering, sanctions, and compliance measures.
