Amid the abrupt crashes of crypto prices on the market, another crypto development has happened out of the blue. Without prior notice or explanation, U.S-based cryptocurrency exchange Coinbase has imposed a 1000-pound minimum deposit on its UK account holders.
According to email correspondence, the exchange revealed that it has suspended its fast Payments Scheme (FPS) in the UK. The service was launched in March 2018 and allowed users to deposit fiat into Coinbase straight through an FPS-enabled UK bank account.
Coinbase’s access to the FPS paved the way for easier transactions for British customers and eliminated the long process of converting crypto assets to euros and then to pounds through an Estonian bank, in order to withdraw crypto from Coinbase. The FPS is a UK banking initiative aimed at reducing transaction times and fees and enabling ease of transaction, deposits, and withdrawal for users. The FPS is the is the main system currently used for money payments in the UK.
Following this development, UK account holders will be forced to use the traditional international transfer option, sending funds via SWIFT, a method that requires a minimum payment amount of 1,000 GBP. SWIFT payments usually take up to five business days to clear, so U.K deposits may now take 10 days to be processed.
Why the Sudden Change in Plans?
Coinbase pioneered the FPS settlement by securing a partnership with UK Barclays bank in 2018 and has experienced tremendous growth in the European market since then, with the UK being the company’s biggest market. This is the basis of the confusion following Coinbase’s abrupt move— and the fact that the exchange has refused to give reason has further intensified the intrigue.
However, speculations are that the sudden shut-off has to do with the regulatory crackdown on bitcoin trading in Europe. In an announcement on Friday, the U.K. government revealed an action plan to “tackle fraud, money laundering, bribery and corruption” in the financial sector. Of course, it was expected that crypto would come into any conversation that ‘money laundering’ is mentioned–and it did. The plan involves “action on crypto-assets” to ensure that they are not used for money laundering and other illicit crimes in the UK.
This is expected to be heralded by the establishment of a new crypto assets regime in collaboration with the U.K.’s Financial Conduct Authority (FCA). The announcement stated that the crackdown involves “going beyond international standards to create one of the most comprehensive global responses to the use of crypto assets in illicit activity.”
To show that they mean business, the FCA followed with job listings for a Cryptoasset Specialist Supervisor and a Crypto Intelligence Associate.
FCA had earlier consulted for a Guidance on Cryptoassets in January to clarify what types of crypto assets fall within its current regulatory scope. Final guidance on crypto-assets is expected soon.
With Facebook’s Libra currently at the receiving end of regulatory scrutiny, the focus is generally on cryptocurrencies and regulators are tightening the noose on the crypto sector globally. Facebook’s Libra might be taking the heat in Congress, but the narrative is the same against existing cryptocurrencies. If crypto were an accused facing the jury, the count would be: facilitating illegal transactions and money laundering, being blatantly uncontrollable and resilient, creating unrepentant buzz on the internet and scaring regulators and traditional financial institutions shitless.
With the UK leaning towards the anti-crypto wagon, it remains to be seen what the fate of cryptocurrency regulations would be in Europe.