As the company deals with recent legal issues, the payment industry heavyweights Visa and Mastercard cutting back their relationships with Binance isn’t shocking, but it is unlikely to affect the crypto exchange’s market dominance.The U.S. Securities and Exchange Commission (SEC) has filed many charges against Binance, the largest cryptocurrency exchange by trading volume, including claims that it deceived investors about the risks of the company and operated an unregistered business.In addition, the exchange is facing penalties from the U.S. Commodity Futures Trading Commission (CFTC) for what it claims a “willful evasion” of American law.
The US Department of Justice is apparently considering filing a fraud charge against Binance and is also investigating into the exchange.According to Dave Weisberger, CEO and co-founder of CoinRoutes, the decision by well-known corporations like Visa and Mastercard is not surprising given all the legal issues Binance is currently experiencing. “It’s unsurprising that payment processors want to distance themselves from that,” he said.
According to reports, Visa stopped issuing new co-branded cards in Europe with Binance.Without giving any other information behind the decision, a Mastercard spokeswoman told CoinDesk that the company’s ties with Binance have come to an end.“We 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 any other crypto card program,” the spokesperson said.
The Binance Card will no longer be accessible to users in Latin America and the Middle East, according to a statement made by Binance on the social networking site X (formerly known as Twitter).Given the crypto exchange’s broad global reach, the move is unlikely to reduce its market share.
“It’s difficult to assess the impact of this on Binance, which is still a leading exchange from a liquidity point of view,” Weisberger said. “Until that changes, people will continue to trade there,” he added.
The end of the partnership may also not be a big deal for the industry as a whole, said Leo Mizuhara, CEO of Hashnote, a CFTC-regulated institutional digital asset management platform. “This development is probably not that big of a deal in terms of the impact on the industry, as people and organizations pulling away from Binance was already pretty much expected given its issues with the CFTC and DOJ,” Mizuhara said.
He added that given the credit card industry’s recent focus, Mastercard’s choice to disassociate itself from Binance appears reasonable.
“Mastercard has shown an increasing appetite to engage with the blockchain industry, and this move away from Binance is more about institutions being cautious about potential bad actors,” Mizuhara added.
Even during the protracted bear market that saw some significant bankruptcies, Visa and Mastercard both remained engaged in the blockchain sector recently.Recently, both Visa and Mastercard declared their intention to carry on with their business partners in introducing payment services into the marketplaces.