The London-based global bank, Barclays, has ended partnership with a cryptocurrency exchange, Coinbase, ending a most satisfying banking relationship in crypto space. This news can hit Coinbase users and crypto community very hard as the users will not be able to use the UK’s Faster Payments Scheme (FPS) and crypto-fiat transfer of British pounds sterling anymore.
An unknown industry source broke this news but this situation is expected to be temporary as Coinbase found a replacement in U.K’s upstart Clearbank which is a younger and less established operation. But Coinbase is hoping to restore its Faster Payments Scheme (FPS) by the end of the third quarter.
This reason for ending this partnership is still unknown but surely, there was an activity that caused this split. According to an unnamed source:
“It is my understanding that Barclays’ risk appetite has contracted a little — I’m not sure exactly why or what’s been driving that, maybe there has been some activity they are not happy with. But it’s about Barclays’ comfort level with crypto as a whole.”
By analyzing events happened in the last weak reveals that this split didn’t take place suddenly as Coinbase de-listed Zcash, a privacy-centric cryptocurrency, last week. According to a person, this was done to get a new bank partner as the bank was uncomfortable to support a currency that makes law enforcement’s job harder.
In March 2018, Coinbase became the first cryptocurrency exchange to open a UK bank account and gain access to the UK’s Faster Payments Scheme (FPS) to vastly improve deposit and withdrawal experience for its users. This made UK customers free from the pain of converting their crypto assets to euros and then to pounds through an Estonian bank, in order to withdraw crypto from Coinbase which was a very time-taking and expensive process.
It has been always tough for the organizations working in the crypto-related operations to get bank partners as banks avoid to indulge itself in crypto business due to price volatility and high risks associated with cryptocurrency.
This is not the first time that Barclays has taken a step back from increasing involvement in the crypto space. In August 2018, Barclays denied it is working on opening a crypto trading desk. The news came after two employees removed LinkedIn evidence they were working on a digital assets project at the bank. Their LinkedIn profiles weres showing that they are working for a digital asset project of the bank.