In October 2023, EUR-denominated weekly spot volume on Binance, a top cryptocurrency exchange, fell to $160 million, an 88% drop from $1.3 billion recorded seven months earlier in March 2023. At this level, EUR trading volume on the besieged exchange is at a three-year low, pointing to how consequential the decision by regulators to crack down on the platform has been this year.
Blame Paysafe For Plunging EUR Volume?
According to Kaiko, on October 18, the contraction was worsened by Paysafe’s decision to terminate its partnership with the exchange by the end of September 2023.
Following this move, clients in the European zone had no options to swap their tokens for Euro. Instead, they had to exit to other cryptocurrencies, mostly the USDT and Bitcoin (BTC), two of the zone’s most liquid assets supported by the exchange’s subsidiaries.
Paysafe didn’t explain why they were terminating their collaboration with Binance. However, considering the increased regulatory pressure on crypto exchanges, especially by agencies in the United States and Europe, Paysafe likely wanted to play safe and not damage its reputation by being associated with the on-siege exchange.
Additionally, with the Markets in Crypto-Assets Regulation (MiCA) set for implementation in the coming months, crypto exchanges must comply with complex regulations to increase transparency and protect users. Subsequently, Paysafe might have found it challenging to comply with all expected regulations while servicing Binance, necessitating the pullout.
Binance Pulling Out From Some European Countries
Beyond Paysafe termination, Binance has been exiting various European countries. Recently, Binance sold its Russian subsidiary to CommEx. In late July, the exchange also left Germany, citing challenges with licensing.
According to the exchange, they “proactively withdrew” their Bafin application after the German regulator declined to grant the exchange a license in June. Around the same month, Binance said they were exiting the Netherlands after failing to secure a virtual asset service provider license from Dutch regulators.
While Binance has scaled down on its European operations, the exchange has a presence in several countries, including Spain, Italy, and France. The French regulator, Autorite des Marches Financiers (AMF), has already licensed the exchange, but updates will be made from January 1, 2024. Approved ramps in France, including Binance and Bitstamp, must reapply before MiCA takes effect.
On October 17, Binance said it would stop accepting new clients in the United Kingdom in compliance with the Financial Conduct Authority’s rules. New regulations implemented by the FCA on October 8 prohibit unlicensed crypto firms from advertising services to clients in the country.
by Dalmas Ngetich via Bitcoinist.com
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