Legal and regulatory challenges: MasterCard and Visa distance themselves from Binance

• Binance is struggling with legal and regulatory challenges
• MasterCard and Visa withdraw from crypto exchange
• Experts do not expect any major impact on the industry

Cryptocurrency platform Binance has been facing intense headwinds from regulators worldwide for a while now, battling both legal and regulatory challenges. The US regulator Securities and Exchange Commission (SEC), for example, sued Binance and its CEO Changpeng Zhao in June for allegedly running a “web of deception,” according to Reuters. The crypto exchange denies the allegations and wants to defend itself “vigorously”.

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MasterCard turns away

Nevertheless, doubts about Binance are growing. The global credit card giant MasterCard has now ended its cooperation with the crypto trading platform, as the company recently confirmed to various news agencies. “We have had four pilot programs in the market with them – Argentina, Brazil, Colombia and Bahrain. This decision applies to each of these Binance programs. There is no impact on other crypto card programs,” a MasterCard spokesperson told CoinDesk. As Reuters reports, these programs are scheduled to end on September 22nd this year.

“The Binance Card will no longer be available to users in Latin America and the Middle East. The product, like most debit cards, was used by Binance users to pay basic daily expenses, but in this case the cards are funded with crypto assets . Only a small portion of our users (less than 1 percent of users in the markets mentioned) are affected. Users of this product have until September 21, 2023, when the card will no longer be available. Binance accounts across the board World are not affected. Where available, users can also shop with cryptocurrencies and send cryptocurrencies using Binance Pay, a contactless, borderless and secure cryptocurrency payment technology developed by Binance,” Binance customer support also announced via X, formerly Twitter.

Hello there,
The Binance Card will no longer be available to users in Latin America and the Middle East. The product, like most debit cards, has been used by Binance’s users to pay for basic daily expenses but in this case, the cards are funded with crypto assets. Only a tiny…

– Binance Customer Support (@BinanceHelpDesk) August 23, 2023

The cards have previously allowed users to make payments in traditional fiat currencies. For this purpose, the cryptocurrency holdings on Binance were used as a source of financing. MasterCard’s head of crypto and blockchain, Raj Dhamodharan, told Reuters in April that every card program “goes through extensive due diligence” and is continually monitored. MasterCard did not want to comment on the decision to end the partnership with Binance – nor on who was responsible for the separation. However, the reason is likely to be the legal and regulatory problems that Binance is facing – it is therefore assumed that the termination of the partnership comes from MasterCard. Because: MasterCard is still interested in the crypto industry and is sticking to other crypto collaborations such as with Gemini.

Developments are not surprising

But MasterCard is not alone in the decision to turn its back on Binance. Back in July, Visa stopped issuing new co-branded cards with Binance in Europe, thereby distancing itself from the cryptocurrency platform.

According to experts, the decisions by Visa and MasterCard to turn away from Binance were to be expected given the various accusations against the crypto exchange. “It is not surprising that payment processors want to distance themselves from this,” CoinDesk quoted Dave Weisberger, CEO and co-founder of CoinRoutes. What happens next for Binance remains exciting. “It is difficult to estimate the impact on Binance, which is still a leading exchange from a liquidity perspective,” Weisberger also noted. And further: “Until that changes, people will continue to trade there.” Meanwhile, Leo Mizuhara, CEO of Hashnote, said, according to CoinDesk: “This development is probably not that big of a deal in terms of the impact on the industry, as people and organizations were already expected to move away given the issues with the CFTC and DOJ Binance Withdraw”.

Editorial team finanzen.net

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