Visa, Mastercard Distancing from Binance: Experts Weigh In

Police & Regulations
Aug 28, 2023 at 01:21 pm

Amidst Binance's recent legal battles in the United States, the move by payment giants Visa and Mastercard to scale down their connections with the exchange is a logical step, though its impact on the crypto platform's market dominance is likely to be limited.

The timing of Visa and Mastercard's decision to distance themselves from Binance coincides with the exchange's ongoing struggle with multiple legal challenges within the U.S. Binance, renowned as the largest crypto exchange based on trading volume, faces a range of accusations from the U.S. Securities and Exchange Commission (SEC). These include claims of operating without proper registration and misleading investors regarding associated risks. Furthermore, the U.S. Commodity Futures Trading Commission (CFTC) levied charges in May, accusing Binance of engaging in "willful evasion" of U.S. regulations.

The U.S. Department of Justice is also reportedly examining Binance and potentially considering fraud charges against the exchange.

Given the litany of legal difficulties Binance is navigating, the actions taken by established entities like Visa and Mastercard come as no surprise, according to Dave Weisberger, CEO and co-founder of CoinRoutes. "It's understandable that payment processors are distancing themselves from this," he noted.

Reports indicate that Visa has halted the issuance of new co-branded cards with Binance in Europe. Meanwhile, a Mastercard spokesperson confirmed the termination of their partnerships with Binance, though specific details behind the move were not disclosed. The spokesperson clarified that the decision impacted several Binance programs across various markets – Argentina, Brazil, Colombia, and Bahrain – but other crypto card initiatives remain unaffected. Visa did not provide immediate comments on the matter.

Binance, via its presence on the social media platform X (previously known as Twitter), communicated that the Binance Card would no longer be available to users in Latin America and the Middle East.

Nonetheless, the consequences of these actions are projected to have a limited impact on Binance's market share. Its global reach remains expansive, which, coupled with its prominence in terms of liquidity, makes it challenging to evaluate the true ramifications of these events. Weisberger emphasized, "It's difficult to gauge how this will affect Binance, which still holds a dominant position in terms of trading activity. As long as that remains the case, traders will likely continue to use the platform."

From a broader perspective, the termination of partnerships might not significantly disrupt the entire industry, according to Leo Mizuhara, CEO of Hashnote, an institutional digital asset management platform regulated by the CFTC. Mizuhara believes that the industry had already anticipated individuals and organizations distancing themselves from Binance due to the ongoing issues with the CFTC and DOJ.

Regarding Mastercard's decision to distance itself, Mizuhara sees it as a reasonable move considering the credit card giant's growing interest in the blockchain sector. Mizuhara suggests that Mastercard's decision is more about exercising caution regarding potential bad actors than solely responding to Binance's situation.

Both Visa and Mastercard have maintained their involvement in the blockchain realm, even amid the extended bear market that witnessed several major collapses. Recently, both companies expressed their intentions to collaborate with industry partners to introduce payment programs to the markets.

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