3 - 4 minute read
Binance.US, the United States arm of global cryptocurrency exchange Binance, is facing difficulties in finding a new bank partner to serve as a fiat on-ramp and off-ramp for its clients in the country. The lack of a direct banking relationship has left Binance.US depending on intermediary banks to store funds on its behalf. According to the Wall Street Journal, the exchange has been struggling to establish direct banking relationships with banks like Cross River Bank and Customers Bancorp.
The recent regulatory crackdown on banks with cryptocurrency clients is also affecting Binance.US’s ability to find a bank partner. The exchange has been the focus of a Commodity Futures Trading Commission (CFTC) investigation since 2021, and in March, the CFTC sued Binance Holdings and its CEO Changpeng “CZ” Zhao for allegedly trading violations.
The lack of a direct bank has also impacted Binance.US’s customers. In a recent status update, the exchange stated that it was transitioning to new banking and payment service providers over the next several weeks, and some USD deposit services would be temporarily impacted during the transition. Currently, Binance.US is holding customer funds via financial technology firm Prime Trust.
“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,” a spokesman for Binance.US told the WSJ.
Binance.US is not the only cryptocurrency exchange facing difficulties with banks. Banks in the United Kingdom are reportedly moving away from accepting clients from the crypto sector. The few banks that still work with crypto firms in the U.K. are requesting more documentation and information about how they monitor clients’ transactions.
What This Means for Traders
The struggles faced by Binance.US in finding a bank partner highlight the regulatory challenges facing cryptocurrency exchanges in the United States. Traders should be cautious when dealing with exchanges that do not have a direct bank relationship as this can impact the timely deposit and withdrawal of funds. It is important for traders to research and choose exchanges with reputable banking partners to ensure the safety of their assets. In addition, traders should closely monitor regulatory developments in the cryptocurrency industry to avoid any potential problems.
