Binance hit by two further banking setbacks in Europe

Quick Take

  • Binance’s custody license application has reportedly been denied by Germany’s financial regulator BaFin, adding to the exchange’s regulatory challenges.
  • Binance’s banking partner for euro deposits and withdrawals, Paysafe, is also ending support for the exchange in September.

BaFin, Germany's financial regulator, has reportedly denied Binance’s application for a custody license. Binance also announced that Paysafe, its banking partner for euro deposits and withdrawals, will end support from September.

BaFin’s denial was reported by the news publication FinanceFWD yesterday. However, the report said it remained unclear whether it was a formal decision or an intention to deny, citing people familiar with the matter.

“While we are unable to share details of conversations with regulators, we continue to work to comply with BaFin‘s requirements. As expected, this is a detailed and ongoing process. We are confident that we have the right team and measures in place to continue our discussions with regulators in Germany,” a Binance spokesperson told The Block in an emailed statement. 

Meanwhile, Binance's current euro banking partner, Paysafe, will cease supporting the crypto exchange after September 25, according to a notification for users, CoinDesk first reported.

Paysafe's decision follows a strategic review, Bloomberg reported, and will impact euro-denominated bank transfers to and from Binance through the Single Euro Payments Area (SEPA) network. Paysafe already ended GBP support for the exchange in May.

"Binance will be changing the provider for EUR deposits and withdrawals via Bank Transfer (SEPA). Our current partner, Paysafe, will no longer be providing these services to Binance users from September 25, 2023,” the Binance spokesperson said.

Binance assured customers that no other fiat currencies were affected or any other products or services on “In the meantime, all methods of depositing and withdrawing other fiat currencies as well as buying and selling crypto on remain unaffected, including bank transfer using one of the other fiat currencies supported by Binance, and buying and selling crypto directly via credit or debit card,” the spokesperson said.

From September 25, “users will need to update the banking details used to deposit to their Binance accounts and may be required to accept new terms and conditions to continue using SEPA services after this date,” Binance’s spokesperson added.

Binance’s regulatory woes

Earlier this month, Binance announced it was exiting the Netherlands after failing to acquire regulatory approval. It also applied to deregister its local entity in Cyprus and is reportedly under investigation in France for alleged money laundering. 

Binance also deregistered its non-operational UK-based entity and Belgium’s financial regulator ordered Binance to stop services in the country. Most recently, Binance also withdrew its license application in Austria, FinanceFWD reported on Monday.

"Binance remains committed to working collaboratively with regulators around the world and we are additionally focused on getting our business ready to be fully compliant with the new EU rules on crypto-assets (MiCA),” Binance’s spokesperson said.

The regulatory issues in Europe are likely stemming from the pressure the exchange is facing in the U.S. Binance and its CEO Changpeng Zhao are facing a lawsuit from the SEC in the United States, alleging that the exchange violated U.S. securities laws, with resepect to unregistered securities offerings and commingling of customer funds. Binance’s native BNB cryptocurrency has fallen over 20% since the lawsuit was announced, according to CoinGecko data. Coinbase also faces a lawsuit from the SEC.

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