Crypto exchange Binance is set to temporarily halt US dollar bank transfers from Wednesday, February 8th, 2023.
“We are temporarily suspending USD bank transfers as of February 8th,” confirmed a Binance spokesperson. According to data from the crypto exchange, USD bank transfers only make up a tiny fraction of monthly active users – just 0.01% of which are using USD bank transfers.
Customers who are regularly using the service are being notified directly, said the crypto exchange. As a result, the world’s largest crypto exchange won’t be allowing deposits and withdrawals that involve the US dollar, beginning Wednesday.
From February 8th, we will temporarily suspend all USD bank transfers.
Only a small proportion of our users will be impacted by this and we are working hard to restart the service as soon as possible.
All other methods of buying and selling crypto remain unaffected.
— Binance (@binance) February 6, 2023
“In the interim, all other methods of buying and selling crypto remain unaffected, including bank transfer using one of the other fiat currencies supported by Binance (including euros), buying and selling crypto via credit card, debit card, Google Pay and Apple Pay and via our Binance P2P marketplace,” the spokesperson added.
According to an official tweet, the service change only affects Binance global, not Binance.US, Binance’s US division.
According to a source, the suspension of US Dollar bank transfers on Binance will last “‘a couple weeks’, or until a new banking partner is established.”
— db (@tier10k) February 6, 2023
Although no specific reason was given for Binance’s temporary suspension of deposits and withdrawals involving the US dollar, some have speculated that the decision was made due to changing attitudes in banks.
After FTX’s implosion, federal regulators have doubled down on warning banks on the potential risks involved with doing business with the crypto industry. Crypto companies have been experiencing difficulties in finding banking partners to facilitate sending money for buying and selling digital assets.
On January 5, the Federal Deposit Insurance Corporation (FDIC) – the US’s primary regulator of banks that are chartered by states that haven’t yet joined the Federal Reserve System – alongside the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of the Comptroller of the Currency have issued a joint statement regarding the risks of crypto assets to financial institutions.
Citing last year’s events, the regulators have come to the conclusion that “issuing or holding as principal crypto-assets that are issued, stored, or transferred on an open, public, and/or decentralised network, or similar system is highly likely to be inconsistent with safe and sound banking practices.”
As a result, last month Binance said that Signature Bank, one of its fiat banking partners, has advised that it will only handle user transactions valued more than $100,000, as the bank is working to decrease its exposure to digital asset-related markets.
“One of our fiat banking partners, Signature Bank, has advised that it will no longer support any of its crypto exchange customers with buying and selling amounts of less than 100,000 USD as of February 1, 2023. This is the case for all of their crypto exchange clients. As a result, some individual users may not be able to use SWIFT bank transfers to buy or sell crypto with/for USD for amounts less than 100,000 USD,” said Binance in a statement.
A Binance spokesperson added that no other banking partners are impacted. SWIFT is a network that is used by financial institutions to transmit information and instructions for transferring money.
While some banks are “withdrawing support for crypto, other banks are moving in,” Binance’s Chief Executive Officer Changpeng Zhao wrote on Twitter. “Some setbacks were expected from last year’s incidents.”