The United States Arm of Binance Faces Challenges in Finding Bank Partners
The United States arm of global crypto exchange Binance has been facing challenges in establishing a new bank partner to serve as a fiat on-ramp and off-ramp for its clients in the country, according to a recent report by the Wall Street Journal.
The recent failures of Silvergate and Signature Bank have left Binance.US without banking services, forcing them to rely on middleman banks to store funds on its behalf, as stated by sources familiar with the matter.
Regulatory crackdown on banks with crypto clients is another factor contributing to Binance.US’s struggles. In March, the U.S. Commodity Futures Trading Commission (CFTC) sued Binance Holdings and its CEO, Changpeng “CZ” Zhao, for alleged trading violations. The cryptocurrency exchange has been the focus of a CFTC investigation since 2021.
Impact on Binance.US Customers
The absence of a direct bank has impacted Binance.US customers. In a recent status update, the exchange announced that it was “transitioning to new banking and payment service providers over the next several weeks,” and that some U.S. dollar deposit services would be temporarily affected during the transition.
Currently, Binance.US is holding customer funds via financial technology firm Prime Trust, with a spokesperson for Prime Trust stating that all funds received from clients are stored through its banking partners.
Binance.US’s Efforts to Secure Bank Partners
Binance.US has been attempting to establish direct banking relationships with banks such as Cross River Bank and Customers Bancorp, but these attempts have so far been unsuccessful.
A spokesperson for Binance.US told the WSJ, “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.”
Similar Challenges in the United Kingdom
Binance.US is operating in an environment similar to what crypto firms are experiencing in the United Kingdom, where banks are becoming increasingly reluctant to accept clients from the crypto sector. The few banks still working with crypto firms in the U.K. are requesting more documentation and information about how they monitor clients’ transactions.
In conclusion, Binance.US has been facing challenges in finding a bank partner in the United States, which has impacted its services and customers. Regulatory scrutiny and the changing landscape of banking relationships with crypto firms are contributing to these challenges. Binance.US continues its efforts to establish stable banking partnerships while navigating the evolving regulatory landscape.
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