The US arm of global crypto exchange Binance has faced challenges establishing a new banking partner to serve as a fiat on-ramp and exit for its customers in the country, according to an April 8 Wall Street Journal article.
The recent failures of Silvergate and Signature Bank have left Binance.US without banking services, relying on intermediary banks to store funds on its behalf, according to the WSJ, citing “people familiar with the matter”.
The regulatory crackdown on banks with crypto clients is also another contributing factor to the stock market’s struggles. In March, the US Commodity Futures Trading Commission (CFTC) sued Binance Holdings and its CEO Changpeng “CZ” Zhao for alleged trading violations. The cryptocurrency exchange has been under investigation by the CFTC since 2021.
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Binance.US needs a bank to directly hold US dollars for its customers, but recent attempts to establish direct banking relationships with banks, such as Cross River Bank and Customers Bancorp, have failed.
Binance.US customers have been affected by the lack of direct banking. In a recent status update, the exchange said that it was “moving to new banking and payment service providers over the coming weeks,” adding that some USD deposit services would be temporarily affected during the transition.
Currently, Binance.US holds client funds through fintech company Prime Trust. A Prime Trust spokesperson said all funds received from customers are stored through its banking partners.
“We are working with several US-based banking and payment service providers and continue to onboard new partners while upgrading our internal systems to create a more stable fiat platform and offer additional services,” said a Binance.US spokesperson told the WSJ.
Binance.US operates in an environment similar to that experienced by crypto businesses in the UK, where banks are moving away from accepting customers from the crypto industry. The few banks still working with crypto firms in the UK are asking for more documentation and information on how they monitor customer transactions.
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