Binance’s regulatory woes appear to have wiped out its Binance Connect service. Why is this a significant loss for the trading platform and what does it say about the current regulatory environment?
Binance Connect fiat-crypto service closes
“Changing markets”. This is how Binance justifies the closure of its Binance Connect service. Formerly Bitfinity, it was launched just two years ago. It provided crypto-fiat payment services, in other words creating bridges between more traditional finance and crypto-currencies. Several services external to Binance made use of it. Around fifty crypto-currencies were taken into account, as well as Visa and Mastercard.
But this is no longer the case. Several external services have confirmed that they will no longer be able to rely on Binance Connect to facilitate access to cryptos, including the Biswap platform:
Dear Biswappers,
The Biswap team keeps abreast of the latest DeFi news and aims to inform you right away.
After a thorough consideration, @binance has made a difficult decision to disable @Binance_Connect on 15 August due to its provider closing the supporting card payments… pic.twitter.com/HcooyLn4sg
– Biswap (@Biswap_Dex) August 15, 2023
Binance’s press release is, as usual, very terse, not mentioning the reasons for this sudden withdrawal:
At Binance, we regularly review our products and services to ensure that our resources continue to be allocated to efforts that are consistent with our long-term strategy. […] We adapt to changing user needs and markets. “
The regulatory woes of Binance
What Binance is referring to in this way are the regulatory setbacks it has faced recently. As soon as it was launched, Binance Connect was criticised by the UK’s Financial Conduct Authority (FCA). The FCA raised its eyebrows when it saw the $36 million loan that the company had granted to another player in the ecosystem, Eqonex.
Services linked to fiat currencies are more closely monitored and controlled among crypto companies. Binance Australia already had to suspend its fiat services last May, citing problems with local provider Zepto. In the United States, fiat deposits and withdrawals were temporarily suspended on Binance US, following attacks by the Securities and Exchange Commission (SEC), the US financial regulator. In Europe, Binance also lost its partner for SEPA transfers in euros in June.
So Binance is no longer in the sanctity of regulators, and fiat-crypto service providers seem to be taking a more cautious approach to the company. But it will take more than that to really threaten the hegemony of the cryptocurrency giant. In June, the latter still accounted for 42% of spot cryptocurrency trading. It does, however, show that the regulatory environment has become much tougher for the exchange.
