The most prestigious banking relationship in crypto has ended.
Barclays, the London-based global bank, is no longer working with cryptocurrency exchange Coinbase, industry sources told CBNN. And while Coinbase found a replacement in U.K. upstart ClearBank, according to people familiar with the situation, the change has inconvenienced the crypto exchange’s users.
That is because, 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), allowing users to instantly withdraw and deposit British pounds at the crypto 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 situation is temporary, though, thanks to Coinbase’s new relationship with ClearBank. One of the U.K. “challenger banks” that have sprouted up in recent years to compete with market incumbents, ClearBank is expected to restore Coinbase’s FPS access by the end of the third quarter.
Barclays and Coinbase declined to comment.
Companies that handle cryptocurrency have a difficult time getting banking partners, with almost all big-name banks eschewing that business.
Thus, when Coinbase obtained a bank account with Barclays in early 2018, the news was greeted with some fanfare. The exchange was also granted an e-money license by the U.K. Financial Conduct Authority (FCA) and was the first crypto firm to gain access to FPS.
Since then, word is that Barclays got cold feet about cryptocurrency clients, people have varying opinions on why this might be but nobody knows for sure.
“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 cryptocurrency as a whole,” said the CEO of a U.K. cryptocurrency company who chose to remain nameless.
Another source described the Coinbase-Barclays relationship as a pilot program that has simply run its course.