Beginning on February 8, Binance will no longer let foreign users to withdraw or make deposits in US dollars, as the company has indicated it would do so temporarily.
The most significant cryptocurrency trading platform in the world said in a tweet on Monday that beginning on Wednesday, they “will temporarily block all USD bank transactions.” Other means of transmission would not be impacted in any way, according to the exchange, which also said that this issue only affects “a tiny fraction” of its members.
The exchange could not give any more information, but they did say that they are “working hard to reinstate the service as quickly as possible.”
In a subsequent tweet, Binance US, a division of the firm that is regulated by the Financial Crimes Enforcement Network of the Treasury Department, said that it is unaffected by the suspension. The statement was made by the company. Therefore, this change will only affect customers located outside of the United States who move money into or out of their bank accounts in dollars.
This change comes at a time when Binance has been having difficulty obtaining banking services in the United States. The banking partner of the exchange, Signature Bank, increased the transaction minimums for dollar transfers at the beginning of the month and said that it would only conduct transactions by customers with USD bank accounts that were more than $100,000.
Binance had said at the time that it was “actively seeking” a new partner to handle the processing of its SWIFT payments. In an email that was issued to subscribers who were adversely affected by the exchange’s actions, it was stated that “0.01% of our average monthly users are served by Signature Bank.”
Back in December, New York-based Signature Bank said that it plans to limit its exposure to customers operating in the cryptocurrency area by losing around $10 billion of deposits. The bank has its headquarters in New York.
Two of the most prominent cryptocurrency banks nowadays are Signature Bank and Silvergate. However, the two were dealt a severe blow by the cryptocurrency market crash that occurred in 2018, which resulted in the loss of around $2 trillion dollars’ worth of value.
After the failure of the cryptocurrency exchange FTX, both banks have been granted loans totaling billions of dollars by the Federal Home Loan Banks, which are part of a system that was initially created to assist with home financing and community investment.
Both Signature Bank and Silvergate got at least $3.6 billion in loans from their respective local home-loan banks during the last quarter of 2022. Signature Bank received approximately $10 billion in loans. While 2022 was Silvergate’s first year working with home-lending institutions, Signature’s loan volume is more than quadruple that of its previous greatest total in the last several years.
Following the failure of FTX, reports indicate that Silvergate had a run on the bank. In addition to taking out loans, the cryptocurrency bank was forced to liquidate $5.2 billion worth of debt instruments that it held on its balance sheet at a considerable loss in order to satisfy about $8.1 billion in withdrawals made by customers. As a consequence of this, it experienced a loss of $718 million, which, according to reports, is more than the sum of the bank’s entire earnings since 2013.
Compiled by Coinbold