According to a report in Financial Times, the UK Financial Conduct Authority (FCA) has said it is concerned about a deal to give Binance, one of the world’s biggest crypto exchanges, access to the UK’s Faster Payment Service (FPS). A few months ago, the regulator warned that Binance would pose a “significant risk” to consumers. On 15 Feb 2022, Binance informed its users that they could now deposit fiat funds via the Faster Payment after it reached an agreement with regulated payments group Paysafe.
The chargeback issue
A significant problem with Binance is that the crypto exchange is used to process questionable and even illegal payments. For example, high-risk merchants such as online brokers increasingly use Binance to process credit and debit card deposits from their clients (victims). In the first step, the customers (victims) buy cryptocurrencies from Binance (and other crypto platforms) via credit card, and these are transferred to the high-risk merchants’ wallets in the second step. However, this means that the customers (victims) no longer have a chargeback option if they have problems with the merchant. Officially, they have bought and received cryptocurrencies with their credit card.
Read our report Fortrade, Invest365, and Binance here!
SEPA and Faster Payments
The agreement with Paysafe gives Binance and its clients better access to the European SEPA and the UK FPS system to deposit and withdraw their FIAT funds. The crypto exchange lost access to Faster Payments last summer after the FCA issued a consumer alert against the exchange and ordered it to stop all regulated activities in the country. Consequently, some of the UK’s largest high street banks blocked their customers from sending money to Binance.
The FCA said it had been notified about the Paysafe deal, but its “concerns about Binance remain.” Paysafe would be aware of the regulator’s concerns and is subject to close ongoing supervision. Binance argued that it would take compliance obligations very seriously and work proactively and collaboratively with regulators.