Tighter regulation on encrypted payment channels, Mastercard and Visa suspend partial cooperation with Binance

Tighter regulation on encrypted payment channels leads to Mastercard and Visa suspending partial cooperation with Binance.

Author: Joy, LianGuaiNews

After being accused by US regulators, Binance’s cooperation with traditional financial institutions faces numerous challenges, which is a microcosm of the crypto industry being “choked” by traditional finance.

A Mastercard spokesperson stated via email on August 24th that Mastercard and Binance will end their four crypto card projects in Argentina, Brazil, Colombia, and Bahrain on September 22nd. Visa has also stopped issuing new co-branded cards with Binance in Europe since July. Mastercard and Visa have not disclosed the specific reasons for this adjustment.

However, Binance posted on the social media platform X (formerly known as Twitter) that less than 1% of users in Latin America and the Middle East would be affected by this decision, and Binance accounts worldwide are not affected. At the same time, Mastercard stated that this does not affect any other crypto card plans. The company said that a grace period will allow cardholders to convert any assets in their Binance wallets. The card service will stop operating in the Middle East on August 25th and in Latin America on September 21st. Users can still process refunds and disputes until December 20, 2023.

Binance debit cards allow users to make purchases in stores or online using their cryptocurrency assets, similar to how traditional debit cards issued by banks work. Less than a year ago, the card was launched in Latin America, first in Argentina in August and then in Brazil in January of this year. It is issued by Movii, allowing users in the region with valid identification to shop and pay bills with cryptocurrency.

Similarly, on August 16th, not long ago, Binance announced in a statement that it will officially shut down its crypto payment service Binance Connect (formerly known as Bifinity) one year after its launch. Binance Connect was launched in March 2022, allowing merchants to accept cryptocurrency payments. The exchange stated at the time that it aimed to help businesses “get ready for cryptocurrency.” The service supports 50 cryptocurrencies and all major payment methods, including Visa and Mastercard.

At that time, Binance gave the reason for closing Binance Connect as “to refocus on its core products and long-term goals, ensuring resources continue to be concentrated on core work that aligns with long-term strategy.” Perhaps, apart from focusing on its own business, the important reason for the termination of this product was the halt by its partners.

Indeed, shortly after the announcement of the closure of Binance Connect, London-based payment processor Checkout.com terminated its contract with Binance on August 17th due to money laundering and compliance issues. In a letter to Binance, Checkout CEO Guillaume Pousaz expressed more concerns about Binance’s anti-money laundering, sanction, and compliance controls. In response, Binance stated that it disagrees with the basis for Checkout’s termination of the contract and is considering legal action. Checkout is one of the partnering institutions of Binance Connect, and another partnering institution of this project, European payment provider LianGuaiySafe, terminated its cooperation with Binance in June.

Earlier, Binance was cut off from the US banking system in February and lost the ability to accept bank transfers from some Australian banks in May. However, the suspension of cooperation in these two regions is not only targeting Binance, but almost all exchanges.

It is worth mentioning that after the boat of friendship with traditional finance capsized, Binance actively built a new payment system.

On August 22nd, Binance announced the launch of its cryptocurrency payment service Binance LianGuaiy in Brazil. It is reported that Latam Gateway is the payment service provider for Binance in Brazil. Binance LianGuaiy is a service provided in cooperation with payment institutions officially licensed by the Central Bank of Brazil, which are ultimately responsible for the processing of payment activities.

Binance LianGuaiy is a contactless, borderless, and secure cryptocurrency payment method that supports more than 70 cryptocurrencies, including Bitcoin (BTC), BNB, Ethereum (ETH), and USDT. Users do not need to pay any fees, while merchants and suppliers can use a solution to accept payments, which can securely transfer funds from wallet to wallet within seconds. Brazilian merchants can choose to pay directly to their wallets in Brazilian Real or cryptocurrency. Since its initial launch in 2021, Binance LianGuaiy has attracted over 12 million active users and has processed over $98 billion in payments so far.

In the current situation where cryptocurrency exchanges are collectively restricted by traditional finance and regulatory institutions, how to break the deadlock and achieve the circulation of funds has become a difficult problem for the foreseeable future.