Once hailed as the most prestigious banking relationship in crypto, Barclays (NYSE:BCS) has today decided that it is no longer working with Coinbase.
The relationship between the London-based banking giant and the crypto exchange began in March last year as Coinbase sought to expand into Europe. The aim of the deal was to make it easier for businesses in the UK that handle cryptocurrency to gain access to banking services. Currently, three-quarters of UK businesses that deal with cryptocurrency are forced to look overseas for banking options as the majority of major banks in the UK tend to stay clear of anything crypto-related.
Earlier this week, news emerged that Coinbase had dropped support for Zcash (ZEC).
Why has Barclays Walked Away?
While last year’s news that Coinbase had obtained a bank account with Barclays was greeted with some degree of fanfare, the bank’s appetite for risk has been sated of late. “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,” said one UK-based crypto CEO.
What Next for Coinbase?
It’s not all bad news for Coinbase, however, as the exchange was immediately picked up by ClearBank, one of the many “challenger banks” that has launched recently to compete with the market leaders. This partnership will allow Coinbase to restore its Faster Payments Scheme (FPS), which allows users to instantly withdraw and deposit pound sterling at the exchange. This will ensure minimal disruption for UK customers who used Coinbase via Barclays.
What Does This Mean for the Crypto Market?
This news comes during a week that has seen faith in the security of cryptocurrencies vastly diminished. Following news that crypto criminals had defrauded over $4 billion in 2019, and another fraud scandal emerging from Veritaseum, Barclays decision to end its partnership with Coinbase is another blow of confidence in the security of cryptocurrencies.
Big banks are clearly keeping cryptocurrency at an arm’s length, but that hasn’t stopped large companies and venture capital funds from pouring money in, with company’s such as Facebook (NASDAQ:FB) and Walmart (NYSE:WMT) recently announcing their own cryptocurrencies.
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