As relationship break ups go, this one is pretty big. The British banking giant has severed its ties with Coinbase, the massive US-based cryptocurrency exchange.
On 13th August Coindesk reported that the change has indirectly inconvenienced the exchange’s users. It explained why: “Aside from the cachet of working with a household-name bank, Barclays connected San Francisco-based Coinbase to the U.K. Faster Payments Scheme (FPS), enabling users to instantly withdraw and deposit British pounds at the exchange. The end of the relationship disrupted Coinbase’s access to FPS — which in turn slowed deposits and withdrawals in GBP for U.K. customers, which now take days to process.”
The reason for the end of the relationship is unknown, but one anonymous source told Coindesk, “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.” Another source described the Coinbase-Barclays relationship as a pilot programme that has simply run its course.
However, the new is not all bad. Coinbase now has a “new relationship with ClearBank, one of the U.K. “challenger banks” that have sprouted up in recent years. ClearBank is expected to restore Coinbase’s FPS access by the end of the third quarter 2019.”
It is difficult for crypto exchanges to find banking partners, with most of the big banks preferring not to get involved. This is why the partnership with Barclays was such big news for Coinbase in 2018. Furthermore, the exchange was also granted an e-money license by the UK’s Financial Conduct Authority (FCA) and was the first crypto firm to gain access to FPS.
Coindesk also commented that ClearBank is not giving Coinbase a free rein. It has had to de-list zcash, because as one source said, “ClearBank was uncomfortable indirectly supporting a currency with features that make law enforcement’s job harder.”