Binance.US, the American division of the global cryptocurrency exchange, has encountered significant obstacles in securing a new banking partner to facilitate fiat on-ramp and off-ramp services for its clients in the United States. The information was disclosed in a Wall Street Journal report on April 8th.
Loss of Silvergate and Signature Bank affects Binance.US operations
The recent withdrawal of support from Silvergate and Signature Bank has left Binance.US without direct banking services. As a result, the exchange now relies on intermediary banks to hold funds on its behalf, according to sources familiar with the situation cited by the Wall Street Journal.
Increased scrutiny on banks serving crypto clients has further exacerbated Binance.US’s challenges. In March, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance Holdings and its CEO, Changpeng “CZ” Zhao, alleging trading violations. The CFTC has been investigating the cryptocurrency exchange since 2021.
To directly hold its clients’ U.S. dollars, Binance.US requires a banking partner. However, recent efforts to forge direct banking relationships with institutions such as Cross River Bank and Customers Bancorp have been unsuccessful.
Customers feel the impact of banking issues
The lack of a direct banking partner has affected Binance.US customers. In a recent update, the exchange stated it would transition to new banking and payment service providers over the next few weeks, cautioning that some U.S. dollar deposit services might be temporarily disrupted during the transition period.
Currently, financial technology firm Prime Trust holds Binance.US customer funds. A spokesperson for Prime Trust confirmed that client funds are stored through its banking partners.
A Binance.US spokesperson told the Wall Street Journal, “We work with multiple U.S.-based banking and payment providers and continue to onboard new partners while upgrading our internal systems to create a more stable fiat platform and offer additional services.”
Binance.US’s situation mirrors cryptocurrency firms’ challenges in the United Kingdom, where banks are increasingly distancing themselves from the crypto sector. The few banks that continue to work with crypto firms in the U.K. are demanding more documentation and information on client transaction monitoring practices.
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