The United States branch of the global cryptocurrency exchange Binance has encountered difficulties in securing a new bank partner.
According to an April 8 Wall Street Journal report, the United States branch of global cryptocurrency exchange Binance has encountered difficulties in establishing a new bank partner to serve as a fiat on-ramp and off-ramp for its clients in the country.
The recent disasters of Silvergate and Signature Bank left Binance.US without banking services, according to the WSJ, which cited “people familiar with the matter.” Binance.US now relies on intermediary banks to store funds on its behalf.
The regulatory assault on banks with cryptocurrency clients is also a contributing factor to the exchange’s difficulties. The U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance Holdings and its CEO Changpeng “CZ” Zhao in March for alleged trading violations. Since 2021, the cryptocurrency exchange has been the subject of a CFTC investigation.
Binance.US Recent initiatives to establish direct banking relationships with institutions, including Cross River Bank and Customers Bancorp, have failed.
Binance Customers in the United States have been impacted by the absence of a direct bank. In a recent status update, the exchange stated that it was “transitioning to new banking and payment service providers over the next several weeks” and that some USD deposit services would be temporarily impacted.
Currently, Binance.US holds client funds through the financial technology company Prime Trust. A representative for Prime Trust stated that all client funds are stored with its banking partners.
According to the WSJ, a Binance.US representative said, “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.”
Binance.US operates in a similar environment to the United Kingdom, where banks are moving away from accepting consumers from the cryptocurrency sector. The few banks still working with crypto firms in the United Kingdom are requesting additional documentation and details on how they monitor client transactions.
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