The U.S. arm of global cryptocurrency exchange Binance has been facing challenges in establishing new banking partners as fiat on- and off-ramps for its customers in the country, The Wall Street Journal reported on April 8.
The recent collapse of Silvergate and Signature Bank left Binance.US without banking services and relying on intermediary banks to store funds on its behalf, the Wall Street Journal reported, citing “informed sources.” A regulatory crackdown on banks with cryptocurrency clients is another factor that has put the exchange in trouble. In March, the U.S. Commodity Futures Trading Commission (CFTC) sued Binance Holdings and its CEO Changpeng Zhao “CZ” for alleged trading violations. Cryptocurrency exchanges have been the focus of CFTC investigations since 2021.
Binance.US needs a bank to hold its customers’ dollars directly, but recent attempts to establish direct banking relationships with banks like Cross River Bank and Customers Bancorp have failed. Binance.US customers are affected by not having a direct bank. In a recent status update, the exchange said it “will be transitioning to a new bank and payment provider over the next few weeks,” adding that some USD deposit services will be temporarily affected during the transition.
Currently, Binance.US holds client funds through fintech firm Prime Trust. A spokesman for Prime Trust said all funds received from customers were deposited through its banking partners. A spokesperson for Binance.US told the Wall Street Journal: “We work with several U.S. banks and payment providers and continue to recruit new partners while upgrading our internal systems to create a more stable fiat platform and provide More services."
Binance.US operates in a similar environment to that of cryptocurrency companies in the UK, where banks no longer accept clients from the cryptocurrency space. The handful of banks still working with the U.K. cryptocurrency firm have requested more documents and information on how they monitor customer transactions.
