Week In Crypto: Binance Sheds More Partnerships As Visa, Mastercard Retreat

September 1, 2023
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Mastercard terminates its debit card partnership with Binance, Binance urges customers to dump its BUSD stablecoin, and X stokes speculation of a crypto payments platform readying for launch.

Mastercard terminates its debit card partnership with Binance, Binance urges customers to dump its BUSD stablecoin, and X stokes speculation of a crypto payments platform readying for launch.

In another difficult week for Binance’s payment ambitions, the world’s largest crypto exchange has lost its partnership with Mastercard and has hit the brakes on its partnership with Visa.

Last week, Binance wrote to holders of the Binance Card in all four markets where the card was launched as a Mastercard, informing them that it will be suspended on August 25.

One month later, on September 21, the cards will be terminated, and customers will be given until December 20 to dispute transactions and claim refunds, if necessary.

This email was sent to cardholders in BahrainBrazilColombia and Argentina, where the cards had been live for between six months (in the case of Colombia) and one year (in the case of Argentina).

Speaking to VIXIO, a Binance spokesperson said the termination of the Mastercard partnership will have an impact on only a “tiny” portion (less than 1 percent) of Binance customers in the affected markets.

The Binance Card was described as a crypto-to-fiat debit card. Users could top up the card using crypto from their Binance exchange account, and when used to make purchases, the crypto would be converted into fiat to be received by the merchant.

“The product, like most debit cards, has been utilised by Binance’s users to pay for basic daily expenses,” the spokesperson said.

Also in the past week, news emerged that Binance’s debit card partnership with Visa has been put on hold until further notice.

A Binance spokesperson confirmed to VIXIO that new card applications throughout the European Economic Area (EEA) were paused on July 19.

However, the pause does not affect existing cardholders, who can still use and reorder their cards, the spokesperson said.

The Binance Card on the Visa network is the older of the two debit cards, having launched in the EEA only in September 2020.

The loss of Mastercard and the pause on Visa follows the early termination of Binance’s partnership with Checkout.com and the shuttering of Binance Connect, a service designed to help merchants accept crypto payments.

As covered by VIXIO, Checkout.com insiders said the company had chosen to distance itself from Binance due to lawsuits against the exchange in key jurisdictions.

Another stablecoin heads for the exit

In other Binance news, this week the company reminded customers to convert any outstanding Binance US Dollar (BUSD) stablecoins into other assets by February 2024.

Specifically, Binance urged customers to convert their BUSD to First Digital USD (FDUSD), a new stablecoin based in Hong Kong that launched following a crackdown on BUSD.

Customers can also trade their BUSD for other assets on the exchange, but Binance warned that all BUSD trading pairs will be gradually delisted by February 2024.

Binance’s eagerness to wean customers off BUSD stems from a cease and desist order that was issued to Paxos Trust, the official issuer of BUSD, in February this year.

The order, which came from the New York State Department of Financial Service (NYDFS), required Paxos to cease new issuance of BUSD and to redeem all outstanding tokens by February 2024.

The NYDFS gave the order after finding that Binance had issued BUSD stablecoins on its own blockchain, the BNB Smartchain, without authorisation.

As per NYDFS permissions, only Paxos was licensed to mint BUSD on the Ethereum blockchain, with its reserves under supervision.

When VIXIO covered the order in mid-February, there was $4.8bn BUSD outstanding on the BNB Smartchain, whose reserves the NYDFS said it could not verify.

The demise of BUSD will bring to an end what was, for most of its history, one of the ten largest crypto-assets in the world.

At its peak in late 2022, there was officially about $22.5bn BUSD in circulation. However, tokens were rapidly redeemed following the NYDFS order, and the outstanding portion now stands at about $3bn.

Elon Musk continues payments licence spree

This week, Elon Musk’s X (formerly Twitter) obtained its seventh money transmitter licence from US state regulators.

Since June this year, X has obtained money transmitter licences in Arizona, Maryland, Georgia, Michigan, Missouri, New Hampshire and, as of this week, Rhode Island.

According to Rhode Island's Department of Business Regulation (DBR), any firm that will be “transmitting money for its customers, including traditional wire transfers (like Western Union) and electronic transfers (like PayPal)" must apply for the licence.

Moreover, the same money transmitter licence is required for firms that plan to operate a crypto exchange or crypto custody business.

If a firm is planning to act as an “agent” of a Rhode Island-licensed money transmitter, and if money transmission is not the firm’s “core profit-making business”, they are not required to apply for a licence.

Although Musk has hinted at integrating both crypto and non-crypto payments into X, his plans for the platform remain unclear.

In October last year, prior to closing his acquisition of the company, Musk said that “Buying Twitter is an accelerant to creating X, the everything app”.

He has since elaborated on this concept by drawing parallels with WeChat, China’s Tencent-owned instant messaging and payments platform.

“We don’t even have an app that’s as good as WeChat in China,” Musk said last year. “In China you can live on WeChat. You can do payments, you can do everything — it’s great.”

In April, in an interview with NBC’s Linda Yaccarino, who he would appoint as X CEO one month later, Musk said he wants X to become “so useful that you find it essential to look after your life”.

This week, X took a step towards that goal, after Musk announced that audio and video calls are coming to X.

“No phone number needed,” said Musk. “X is the effective global address book.”

The X CEO is still to clarify where crypto fits into these plans, but after he briefly changed the company’s logo to the Dogecoin logo back in April, crypto enthusiasts are expecting that he has something in mind.

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