Payment giants Visa and Mastercard paring back their ties with Binance isn’t surprising as the company grapples with recent legal challenges, but it is unlikely to hurt the crypto exchange’s market share.
Binance, the biggest crypto exchange by trading volume, is facing multiple charges by the U.S. Securities and Exchange Commission (SEC), including allegations that the exchange has been operating an unregistered business and misled investors about the company’s risks. This is in addition to charges brought against the exchange by the U.S. Commodity Futures Trading Commission (CFTC) in May for what it calls a “willful evasion” of U.S. law.
The U.S. Department of Justice is also looking into the exchange and is reportedly considering charging Binance for fraud.
Given all the legal challenges Binance is facing, the move by mainstream companies like Visa and Mastercard is not surprising, said Dave Weisberger, CEO and co-founder of CoinRoutes. “It’s unsurprising that payment processors want to distance themselves from that,” he said.
Visa reportedly stopped issuing new co-branded cards with Binance in Europe. A Mastercard spokesperson confirmed the end of its partnerships to CoinDesk with Binance, without providing the details behind the decision. “We had four pilot programs in the market with them – Argentina, Brazil, Colombia and Bahrain. This decision applies to each of these Binance programs. There is no impact on any other crypto card program,” the spokesperson said. Visa didn’t immediately respond to requests for comments.
Binance said on social media platform X (formerly known as Twitter) that the Binance Card will no longer be available to users in Latin America and the Middle East.
However, the move is unlikely to hurt the crypto exchange’s market share, given its extensive global footprint. “It’s difficult to assess the impact of this on Binance, which is still a leading exchange from a liquidity point of view,” Weisberger said. “Until that changes, people will continue to trade there,” he added.
The end of the partnership may also not be a big deal for the industry as a whole, said Leo Mizuhara, CEO of Hashnote, a CFTC-regulated institutional digital asset management platform. “This development is probably not that big of a deal in terms of the impact on the industry, as people and organizations pulling away from Binance was already pretty much expected given its issues with the CFTC and DOJ,” Mizuhara said.
He also said that Mastercard’s decision to distance itself from Binance seems reasonable given the credit card giant’s recent focus on the blockchain industry. “Mastercard has shown an increasing appetite to engage with the blockchain industry, and this move away from Binance is more about institutions being cautious about potential bad actors,” Mizuhara added.
Both Visa and Mastercard have been active in the blockchain industry recently, even during the prolonged bear market that saw several major bankruptcies. Most recently, both Visa and Mastercard said they intend to continue with their industry partners to bring payment programs into the markets.