Binance has informed its retail customer base of this service disruption on 21 January 2023, and they also revealed that they are actively seeking a new SWIFT (USD) partner in order to avoid any service interruptions. The partner in question is Signature Bank, which is setting a minimum transaction limit of USD 100,000 in a bid to distance itself from the digital asset market.
In light of these events, Binance emphasised that its customers will still be able to use their credit or debit cards to buy or sell cryptocurrencies. Moreover, payments to or from third-party exchanges would still be processed. They also stressed that the limit in question represented the banking partner’s decision and that Binance wouldn’t be the only trading platform that would feel its impact.
The service disruption will affect users with USD bank accounts that are looking to buy or sell cryptocurrencies for less than USD 100,000 via the SWIFT payment system. Binance revealed that no other banking partners are impacted and that Corporate Account clients will not be affected by this change.
According to Bloomberg, US-based Signature Bank has revealed in December 2022 that it plans to shed as much as USD 10 billion in deposits from digital asset clients in an effort to distance itself from the cryptocurrency industry.
The move comes in the context of tightening cryptocurrency regulation and warnings issued by entities such as the Federal Reserve, FDIC and OCC. In January 2023, the aforementioned agencies have released a joint statement in order to warn banks about the risks associated with crypto assets.
The agencies highlighted that there are several risks that cannot be managed in the crypto asset sector and that those risks should not make their way to the traditional banking system. Some of the risks they identified include fraud, volatility, and contagion.
The federal agencies also talked about the state of crypto regulation in the United States and how it can change on a case-by-case approach. Through these case-by-case approaches, regulators continue to gather knowledge and expertise as well as the risks crypto assets may pose to banking organisations and their clients.
In the UK, the Financial Conduct Authority has issued its own warnings about the high-risk nature of cryptocurrencies following the collapse of FTX. The FCA reported that as many as 80,000 UK investors were left out of pocket because of the collapse.
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