Binance.US Having Difficulty Finding A Cash Banking Partner In The US

Key Points:

• Binance.US has struggled to find a bank to hold its users’ funds after Signature Bank failed, leaving it without a vital banking partner.
• The exchange uses at least one middleman to keep cash, and since the money is stored by a third party, it may impede sending and transferring payments.
• The main challenge for Binance.US is finding a bank that would directly hold its clients’ funds.

After the fall of Signature Bank last month, Binance.US is trying to find a bank to handle its clients’ cash, the Wall Street Journal said on Saturday, citing individuals familiar with the case.

According to the WSJ, citing people familiar with the subject, the recent collapses of Silvergate and Signature Bank left Binance.US without banking facilities, relying on middleman’s banks to keep cash on its behalf.

Earlier, deposits were transmitted to Signature Bank or Silvergate, both of which are considered crypto-friendly banks. Once both failed, however, the exchange scrambled to locate a new financial partner.

The report says that Binance.US uses at least one middleman to keep cash, and since the money is stored by a third party, it may impede sending and transferring payments.

The company has sought unsuccessfully to develop ties with Cross River Bank and Consumers Bancorp Inc, but banks are hesitant owing to regulatory risk. A spokesperson for Binance.US told the WSJ.

“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.”

Customers of Binance.US have been impacted by the absence of a direct bank. In a recent status update, the exchange said that it would be migrating to new banking and payment service providers over the next few weeks, and that certain USD deposit services might be temporarily disrupted.

Another aspect adding to the exchange’s difficulties is the regulatory crackdown on banks with crypto customers. The Commodities Futures Trading Commission (CFTC) of the United States sued Binance Holdings and its CEO, Changpeng “CZ” Zhao, in March for suspected trading breaches. Since 2021, the crypto exchange has been the subject of a CFTC investigation.

Since at least 2020, the Securities and Exchange Commission and the Justice Department have been investigating Binance’s link with Binance.US, which has no listed headquarters.

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Harold

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