Global crypto exchange Binance is suspending deposits and withdrawals in U.S. dollars via bank accounts starting Wednesday as more and more banking institutions try to reduce their exposure to the crypto market. “We are working hard to restart service as soon as possible,” Binance said.
Binance Suspending USD Deposits and Withdrawals
Global cryptocurrency exchange Binance is reportedly suspending withdrawals and deposits in U.S. dollars using bank accounts starting Wednesday. Without providing a reason, a spokesperson for Binance told CNBC:
We are temporarily suspending USD bank transfers as of February 8th. Affected customers are being notified directly … We are working hard to restart service as soon as possible.
“0.01% of our monthly active users leverage USD bank transfers,” the spokesperson continued, noting that bank transfers using other fiat currencies and other methods of buying and selling cryptocurrencies on Binance, such as using credit cards, Google Pay, and Apple Pay, “remain unaffected.”
Nonetheless, the spokesperson claimed: “We’re still overwhelmingly net-positive on net deposits … Outflows always tick up when prices start to level off following a bullish market swing like we saw last week as some users take profits.”
Meanwhile, Binance US, a unit of Binance that is regulated by the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) clarified on Twitter that it is a separate entity from Binance and its customers are not affected by the suspension.
Banks Reducing Exposure to Crypto Market
A growing number of banks have been reducing their exposure to the crypto market following the collapse of crypto exchange FTX.
Binance said last month that its banking partner Signature Bank will only process transactions exceeding $100,000 from the beginning of this month. The bank previously stated that it plans to reduce up to $10 billion in deposits from cryptocurrency clients.
The Federal Reserve, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) recently issued a joint statement warning banking organizations about crypto risks. “The agencies have significant safety and soundness concerns with business models that are concentrated in crypto-asset-related activities or have concentrated exposures to the crypto-asset sector,” the joint statement reads.
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A student of Austrian Economics, Kevin found Bitcoin in 2011 and has been an evangelist ever since. His interests lie in Bitcoin security, open-source systems, network effects and the intersection between economics and cryptography.
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Binance, one of the world’s largest cryptocurrency exchanges, announced on August 9th that it will be halting US dollar deposits and withdrawals via bank accounts for US customers. This decision is due to the restrictions imposed by US financial regulators.
The move was first announced in a post on Binance’s website and blog, which stated that the exchange will be limiting US customers’ access to USD deposits, withdrawals, and trading starting Saturday, August 10th. The post further explained that the limitation was due to regulatory requirements in the US, and that Binance was expecting to reinstate these services as soon as possible.
The decision to restrict USD deposits and withdrawals via bank accounts is just the latest in a string of moves by Binance to comply with US regulatory requirements. The exchange was one of the first to introduce know-your-customer (KYC) procedures for customers, and has recently launched a new platform, Binance.US, to comply with US regulations.
Despite the limitation in services, Binance remains committed to providing US customers with the ability to trade cryptocurrencies, and has stated that it will continue to explore ways to give them access to the same features and services offered to customers from other countries.
The impact of this decision is yet to be determined, but it certainly has the potential to affect how US customers interact with the financial sector. That said, Binance’s decision to limit services should be seen as a sign that the exchange is taking the necessary steps to comply with US regulations, and as a result, it should help bolster trust in the industry as a whole.