Since the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank, crypto companies have been searching for new banking partners in the United States. According to a recent report citing “sources familiar with the matter,” Binance US, the U.S. subsidiary of the cryptocurrency exchange, is facing difficulty in getting a U.S. banking partner.
Sources Say Binance is Struggling to Establish U.S. Banking Connections
The Wall Street Journal (WSJ) reported on Saturday that Binance US is having difficulty in finding a U.S. banking partner. Currently, Binance US customers have been notified that “particular USD deposit services are temporarily unavailable.” Binance US has stated that it is “transitioning to a new banking partner,” and services will resume once the process is through.
However, sources quoted by WSJ reporters Caitlin Ostroff, Rachel Louise Ensign, and Alexander Osipovich indicate that Binance has encountered difficulties in discovering a banking partner. The report states that Binance US has allegedly attempted to set up connections with numerous particular banks after the breakdown of the three crypto-friendly U.S. banks. The report from Ostroff, Louise Ensign and Osipovich adds:
Binance US has failed to create direct banking relationships with banks including Cross River Bank, the New Jersey-based lender that serves some crypto and financial-technology firms, and Customers Bancorp Inc., a Pennsylvania-based regional bank, in recent months, the people said.
The reporters further spoke with a spokesperson from Binance US, who stated, “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.” It is not known if other crypto businesses are facing similar issues in finding banking partners, but the crypto exchange Bittrex recently shut down its U.S. operations, citing excessive regulatory oversight in the United States as the reason for the closure.
On March 27, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance Holdings Ltd., the parent company of Binance US, alleging violations of trading and derivatives rules. The lawsuit also includes Binance CEO Changpeng Zhao (CZ) and the company’s former chief compliance officer, Samuel Lim. The WSJ report on Saturday stated that “among the reasons that some banks were hesitant to do business with Binance US was concern over regulatory risk,” according to sources familiar with the matter.
How do you think the future of crypto exchanges will look like in terms of partnering with traditional banking institutions, especially in light of increased regulatory scrutiny? Share your thoughts in the comments section below.
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