2023-8-29 18:23

Invezz understands that Revolut looks to have quietly blocked transactions to crypto lending platform Nexo – according to responses the UK-based neobank’s customer support offered to one aggrieved account holder.

Simply put, it appears the fintech platform no longer supports outbound transactions to Nexo. That’s what a customer in the UK just learnt after they “unsuccessfully” tried to send money from their Revolut account to the crypto platform.

In a lengthy communication exchange, Revolut confirmed to the long-time UK account holder that Revolut no longer allows transactions with Nexo. This was a surprise to the account holder, who had received no communication from Revolut regarding blocking transactions with Nexo

Details of the exchange between Revolut customer support staff and the customer indicate the digital bank ended support for Nexo on 17 August.

Invezz has reached out to both Revolut and Nexo for confirmation and comment, but at the time of publication have yet to receive a response.

Where’s the transparency?

When Nikolay Storonsky and Vlad Yatsenko launched Revolut in 2015, one of the platform’s stated goals was to “challenge” traditional banks and banking sector norms. Among key concerns, and which crypto looks to fix, include costs, transaction time and transparency.

The challenger banks grew on this premise and it therefore would be hugely disappointing if a company built on these values reneges or shows to be headed that way.

It should be noted that Revolut Bank can restrict or limit accounts for various reasons, including in cases where there’s belief an account has been compromised. Accounts can also be flagged for being in violation of T&Cs or when not updated as required – details such as tax information are key. Transacting to accounts of unsupported industries is also listed as a reason for account limitation.

So what was the case here?

Although it appears Revolut halted support for the Nexo nearly two weeks ago, there has been no official communication from both companies. Junior employees revealed that what they disclosed to the customer were only “the details that are also visible and provided” to them. In one of the responses, an agent says:

“Upon checking with the transactions, sadly, this beneficiary is no longer supported by Revolut. In this case sending funds to this recipient will be declined. It happens due to internal security reasons.”

Here’s a screenshot showing a response from one of the agents:

The agent then recommended that the customer should use a “different bank to transfer the funds to this beneficiary.” The fact that the rejected transfers are a result of internal security measures is also repeated by one Thea, who identifies as the duty manager.

Another screenshot confirming the date Revolut blocked Nexo:

Despite all these, one thing stands out – no customer notification has reportedly been issued to the effect that Revolut no longer supports transfers to Nexo.

Crypto and regulatory compliance

As one of the leading challenger banks, Revolut has seen enormous growth since its launch in 2015. One of its biggest market in recent months has been Spain.

In June, its retail customers across the globe surpassed 30 million, with 6.8 million of them in the UK. Growth amid broader adoption for its mobile app, card and crypto products saw monthly transactions surpass 400 million at the start of June 2023, up from 350 million in November 2022.

But while registration and regulation by the UK’s Financial Conduct Authority (FCA) has put it on the path to revolutionizing digital banking space, traction in the crypto market isn’t without major hiccups.

Strict regulations on AML and CFT (counter-terrorism financing) mean companies have to ensure compliance to stringent requirements. The UK and EU are leading the market with regulatory frameworks for crypto, MiCA and FSMA recently enacted into law.

But in some places regulators are up in arms against crypto, including in the US where Revolut was recently forced to halt cryptocurrency services to US customers due to the unfriendly regulatory environment. Specifically, US customers will not access crypto services as from September 2, while the service will be fully discontinued on October 3.

In June, Revolut began blocking the accounts of Russians within the EU, with restrictions on its card and account down to stricter requirements on residence permits.

Nexo, a crypto-lending platform founded in 2018, announced its exit from the US market in December last year, with this coming amid the crypto crackdown by the US Securities and Exchange Commission (SEC). The FCA-regulated company offers products such as crypto-backed loans, crypto-earning accounts and a crypto-card.

The post Have Revolut quietly blocked Nexo? appeared first on Invezz.

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