Key Takeaways
- Withdrawals and deposits in GBP to be halted as a major crypto exchange loses its local banking partner
- UK clients to be affected by the change; new users impacted immediately, existing users from May 22
- Other fiat currencies and payment methods remain unaffected on the platform
The Tumultuous Crypto Landscape
The rapidly evolving cryptocurrency industry has seen a significant shakeup as a major non-custodian crypto exchange faces the loss of its local banking partner. This development has sent shockwaves throughout the market, especially for UK clients who will be directly impacted by the decision. The termination of the operating agreement comes amid a chaotic time in the crypto world, with regulatory challenges posing significant hurdles for companies operating in this space.
A Closer Look: The Impact on UK Clients
On March 13, the crypto exchange informed its users via email that it will no longer be able to process withdrawals and deposits in GBP starting May 22. Despite the fact that this change is estimated to impact less than 1% of its user base, those affected will still be able to access their account balances. The exchange assured customers that their accounts remain unaffected and that other functionalities remain unchanged.
As the exchange’s spokesperson clarified:
- All methods of depositing and withdrawing other fiat currencies will continue without disruption
- Buying and selling crypto directly via credit or debit card is still available
- Bank transfers using other supported fiat currencies can still be performed
The Root Cause: Regulatory Uncertainty
The online payment company responsible for the exchange’s GBP transactions, Paysafe, has cited the challenging regulatory environment surrounding cryptocurrency as the primary reason for the sudden halt. In a statement, Paysafe explained that the UK regulatory environment is too difficult to navigate at this time, and the decision was made out of an abundance of caution.
A History of Regulatory Struggles
The crypto exchange has been grappling with regulators in the UK since it first launched its services in the region in 2020 without restrictions. The UK’s Financial Conduct Authority (FCA) issued a warning regarding the exchange’s operations in June 2021, stating that it was not permitted to undertake any regulated activities.
This led to the partnership between the exchange and Paysafe, a UK-regulated company, to facilitate deposits and withdrawals through the SEPA payment network and Faster Payment Services (FPS). With the termination of this partnership, it remains uncertain whether the exchange can find another partner to restore its services.
The Future of Crypto Regulations and Industry Impact
This recent development highlights the ongoing struggles between cryptocurrency exchanges and regulatory authorities. As governments grapple with the implications of digital currencies and the potential risks they pose, the lack of a clear regulatory framework is creating hurdles for companies operating in this space.
The impact on the affected UK clients serves as a stark reminder that the cryptocurrency industry is still in its infancy, and until a comprehensive regulatory system is in place, more incidents like this may occur. As the market matures, it is crucial for governments, regulatory bodies, and companies to work together in creating an environment that fosters innovation while ensuring the safety and security of all stakeholders.
The loss of a major banking partner for this prominent crypto exchange sends a clear message about the complexities of operating within the cryptocurrency industry. UK clients must now adapt to the changes and seek alternative methods for managing their crypto investments. As the industry continues to grow and evolve, investors, companies, and regulators must navigate these turbulent waters together, striving for stability and security in an ever-changing landscape.
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