The most prestigious banking relationship in the field of encryption has ended.
According to recent media reports, industry sources told CoinDesk that Barclays, the London-based global bank, is no longer working with the cryptocurrency exchange Coinbase. According to people familiar with the matter, although Coinbase found the British upstart Clearbank as an alternative, this change indirectly caused inconvenience to users of the exchange.
This is because, in addition to the reputation of working with a well-known bank, Barclays also links San Francisco-based Coinbase with the UK's Faster Payment Program (FPS), enabling users to immediately be on the exchange. Extract and deposit into the pound. The end of the relationship interrupted Coinbase's visit to FPS, which slowed the deposits and withdrawals of British customers on the pound, and now the process takes several days.
However, due to the new relationship between Coinbase and ClearBank, this situation is only temporary. Clearbank is one of the “challenger banks” in the UK and has risen in recent years to compete with existing banks in the market. Clearbank expects to resume Coinbase's FPS access by the end of the third quarter.
Barclays, ClearBank and Coinbase declined to comment.
The wind is biting and can only recede
It is difficult for companies dealing with cryptocurrencies to find bank partners because almost all major banks are shunning this business.
So when Coinbase got a bank account from Barclays in early 2018, the news caused some sensation. The exchange also received an electronic money license from the Financial Market Conduct Authority (FCA) and was the first encryption company to enter FPS.
Since then, it has been rumored that Barclays has retreated in terms of encryption customers; people have different opinions on why this happens, but no one can be sure.
“My understanding is that Barclays’ risk appetite has declined – I’m not sure what the reason or cause is, or maybe they’re not happy with certain activities. But it’s about Barclays’ familiarity with the entire cryptocurrency field. "The CEO of a British encryption company, who asked not to be named, said.
Another source said that the relationship between Coinbase and Barclays was only an attempt and has now come to an end.
This is not to say that ClearBank has given Coinbase full authority.
Earlier this week, Coinbase took the privacy-centric cryptocurrency Zcash off the shelf. Zcash uses a technique called "zero knowledge proof" to hide transaction details from blockchain observers. A person familiar with the matter said that Coinbase’s move was “completely related to the new bank”; ClearBank was uneasy about indirectly supporting such a currency because certain characteristics of the currency made law enforcement more difficult.
Coinbase is not the only encryption company that has succeeded in winning Barclays. In 2016, Barclays said that the bank may be more interested in the technology, it is working with Circle Internet Financial, the latter's main product is Circle Pay, which is regulated by the Financial Services Authority (FCA). The app uses Bitcoin to help with free currency transfers. Customer deposits are held by Barclays Bank.
Barclays said at the time: "We can confirm that Barclays Corporate Banking has been selected by Circle as a financial partner, and we support exploring the positive use of the blockchain to benefit consumers and society."
Both Barclays and Circle declined to comment on the relationship between them. Circle has shifted its focus from retail payments to cryptocurrency transactions.
In addition to working with Barclays, Coinbase has maintained a banking relationship with the Estonian-based LHV Bank for many years. LHV has been working hard to provide faster payment methods in the UK, but according to industry insiders, this may still have a way to go.
A LHV spokesperson told CoinDesk:
“Technically, we have joined the Faster Payments Program (FPS), but before we start offering faster payments to our fintech customers, we still have some issues to solve, and some legal details need to be addressed.”
Other entry points
Elsewhere in the UK, BCB Group, a cryptocurrency brokerage regulated by the FCA, is also working with ClearBank. The broker recently announced a deal that will allow the Luxembourg-based BitStamp exchange to speed up the payment of the pound.
BCB founder and CEO Oliver von Landsberg-Sadie told CoinDesk:
“All of our clients’ sterling funds are settled in FCS within 60 seconds; Bitstamp is likely to be built internally to pass this benefit to their sterling customers (by processing the payment information they receive as soon as possible) ""
Another popular way to get faster payments is through the FCA-regulated Enumis, which recently started working with Coinfloor, the oldest cryptocurrency exchange in the UK, acting as a bank for cryptocurrency companies.
Despite seeking to reduce the risk of cryptocurrency business, Barclays Bank still provides operational banking services to blockchain company Blockchain.info. British wallet provider Blockchain.info recently announced plans to enter the field of Bitcoin exchanges with its ultra-fast PIT trading services.
Currently, Blockchain.info does not state whether its Barclays account is the means by which the company can provide faster payments for its new exchange business.