The United States branch of global cryptocurrency exchange Binance has encountered difficulties in finding a new banking partner to act as a fiat on-ramp and off-ramp for its clients in the country.
According to a report by the Wall Street Journal on April 8, the recent failures of Silvergate and Signature Bank have left Binance.US without banking services, forcing it to rely on middleman banks to store funds on its behalf.
Binance.US is currently in need of a bank to directly hold its client’s US dollars, but recent attempts to establish direct banking relationships with banks such as Cross River Bank and Customers Bancorp have failed.
The regulatory crackdown on banks with cryptocurrency clients is also a contributing factor to the exchange’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. Binance.US customers have been affected by the lack of a direct bank. In a recent status update, the exchange said that it “was transitioning to new banking and payment service providers over the next several weeks,” adding that some USD deposit services would be temporarily impacted during the transition.
Currently, Binance.US is holding customer funds through financial technology firm Prime Trust. A spokesperson for Prime Trust stated that all funds received from clients are stored through its banking partners.
“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 operating in a similar environment to that which cryptocurrency firms are experiencing in the United Kingdom, where banks are moving away from accepting clients from the crypto sector.
The few banks still working with crypto firms in the UK are requesting more documentation and information about how they monitor clients’ transactions.
The lack of a direct banking partner has been a significant issue for Binance.US, as it has forced the exchange to rely on middleman banks to store funds.
This has resulted in a less stable fiat platform and limited services for its customers. The regulatory crackdown on banks with cryptocurrency clients is another factor that has contributed to the exchange’s struggle to find a new banking partner.
Banking Partners
In Summary Binance.US remains optimistic and is actively seeking new banking partners to establish a more stable fiat platform and expand its services.
The exchange’s spokesman stated that it continues to onboard new partners while upgrading its internal systems to create a more stable fiat platform and offer additional services. Despite the challenges, Binance.US remains committed to providing reliable services to its clients in the United States.