The American branch of the huge cryptocurrency exchange Binance has had trouble finding a new bank partner.
According to a Wall Street Journal article published on April 8, Binance’s US branch has had trouble finding a new bank partner.
According to the WSJ, which cited “people familiar with the subject,” Binance.US was left without banking services as a result of the recent failures of Silvergate and Signature Bank and was forced to rely on intermediary institutions to store its funds.
With the financial technology company Prime Trust, Binance.US is now keeping customer assets. According to a Prime Trust representative, all client monies are kept by the company’s banking partners.
The U.S. Commodities Futures Trading Commission (CFTC) filed a lawsuit against Binance Holdings and Changpeng “CZ” Zhao, the company’s CEO, in March for suspected trading breaches. The CFTC has been looking into the cryptocurrency exchange since 2021.
Although the sector frequently positioned itself as a bank substitute, many businesses nevertheless rely largely on banks to connect with a financial system that uses hard currencies like dollars and euros.
Binance, Nevertheless, recent attempts to create direct banking ties with banks, like Cross River Bank and Consumers Bancorp, have failed due to the lawsuit filed against its crypto branch. The US bank needs a bank to keep its clients’ U.S. cash directly.
The lack of a direct bank has an impact on US clients. In a recent status update, the exchange stated that it would be switching to new banking and payment service providers over the following several weeks, noting that this may temporarily affect some U.S. dollar deposit services.
A spokesman for Binance.US said that;
“In order to build a more reliable fiat platform and deliver more services, we collaborate with numerous U.S.-based banking and payment companies, continue to onboard new partners, and upgrade our internal systems.”
Although, the operating environment for crypto companies in the US is comparable to that in the UK, where banks are turning away customers from the sector. The few U.K. banks that are still collaborating with cryptocurrency businesses are asking for additional proof and details regarding their monitoring procedures.
It is clear that the Bitcoin business still has a difficult time finding trustworthy banking and payment service providers. It is challenging for cryptocurrency companies to operate as a result of the regulatory crackdown on banks that have clientele who use cryptocurrencies. Because of this, many cryptocurrency exchanges, like Binance’s US office, have turned to employ intermediary institutions to keep funds, which may have a bad effect on customers.
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