Binance, the largest crypto exchange in the world, has announced that it will temporarily suspend US dollar withdrawals and deposits for international customers starting on February 8. According to a recent tweet, the exchange will only impact a small proportion of their users. Other transfer methods will not be affected.
The Why to Suspend
The suspension applies only to non-U.S. customers who transfer money to or from bank accounts in the exchange of American dollars. Binance US, a unit of the company that’s regulated by the Treasury Department’s Financial Crimes Enforcement Network, is not affected by the suspension.
The move comes as Binance encounters banking challenges in the United States. This is due to its financial partner, Signature Bank, raising transaction minimums for dollar transfers to $100,000. Due to this activity, Binance was prompted to send an email to impacted customers. The exchange explained just, “0.01% of our monthly users receive service from Signature Bank.”
The increase has also prompted the platform to actively find a new partner to process SWIFT wire transactions. Headquartered in New York, Signature Bank announced December that changes were coming. The organization seeks to reduce its exposure to clients operating in the crypto space by shedding approximately $10 billion of deposits.
Meanwhile, banks like Signature Bank and Silvergate, which are two of the biggest crypto institutions, face their own challenges. One of which is the difficulties following last year’s crypto meltdown that wiped out around $2 trillion worth of value from the market.
The banks have received billions in loans from the Federal Home Loan Banks. This system was originally designed to support housing finance and community investment. Signature Bank received nearly $10 billion in loans from its local home-loan bank in the last quarter of 2022. Silvergate received at least $3.6 billion.
Silvergate faced a bank run and had to sell $5.2 billion of debt securities at a significant loss to cover user withdrawals. The result was a $718 million loss that reportedly exceeds the bank’s total profits since 2013.
Binance did not provide additional details on the decision to suspend these transactions. The platform has stated that they are working hard to restart the service as soon as possible.