Crypto World Shaken by Binance’s Temporary Ban on US Bank Transfers
As of February 8, Binance will temporarily suspend US dollar withdrawals and deposits for international customers.
According to a tweet on Monday, the world’s largest crypto exchange will “temporarily suspend all USD bank transfers” starting Wednesday. The exchange added that other transfer methods will not be affected, stating that only “a small proportion” of users will be affected.
Despite not providing further details, the exchange said they “are working hard to restart the service as soon as possible.”
Moreover, Binance US, which is regulated by the Treasury Department’s Financial Crimes Enforcement Network, said it is not affected by the suspension. As a result, the move only applies to non – U.S consumers who transfer money between bank accounts in dollars.
Binance has been dealing with banking issues in the United States. Last month, the exchange’s banking partner, Signature Bank, announced that it would only process trades from users with USD bank accounts worth more than $100,000.
Binance stated at the time that it is “actively seeking” a new partner to process its SWIFT payments. Signature Bank services only “0.01% of our average monthly users,” according to an email sent to affected users.
Signature Bank, based in New York, announced in December that it plans to reduce its exposure to cryptocurrency clients by shedding about $10 billion in deposits.
Signature Bank and Silvergate are two of the most important cryptocurrency banks. However, the duo was hard hit by last year’s crypto meltdown, which saw around $2 trillion in value wiped out of the crypto market.
Following the demise of the bitcoin exchange FTX, both banks have received billions in loans from the Federal Home Loan Banks, a system initially created to assist home finance and community investment.
In the fourth quarter of 2022, Signature Bank received nearly $10 billion in loans from its local home-loan bank, while Silvergate received at least $3.6 billion. Signature’s loans are more than double their previous highest sum in several years, and 2022 will be Silvergate’s first year utilizing home-loan banks.
Following the failure of FTX, Silvergate experienced a bank run, as previously reported. Aside from loans, the crypto bank was forced to sell $5.2 billion in debt securities on its balance sheet at a significant loss in order to cover around $8.1 billion in user withdrawals. As a result, it suffered a $718 million loss, which surpassed the bank’s total profits since 2013.
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