Binance.US in Search of New Banking Partner Amid Regulatory Crackdown

Binance.US, a popular cryptocurrency exchange in the United States, has been encountering challenges in finding a new banking partner that can serve as a fiat on-ramp and off-ramp for its customers. According to sources familiar with the matter, the recent collapse of two banks, Silvergate and Signature Bank, has left Binance.US without banking services, forcing the exchange to rely on intermediaries to store its funds.

The regulatory crackdown on banks that have dealings with cryptocurrency firms has also made it difficult for Binance.US to find a bank that can directly hold its clients’ US dollars. This crackdown has been intensified by recent allegations by the US Commodity Futures Trading Commission (CFTC) against Binance Holdings and its CEO Changpeng “CZ” Zhao for trading violations. The exchange has been under investigation by the CFTC since last year.

To ensure smooth operations, Binance.US requires a bank that can hold its clients’ US dollars. However, efforts to establish direct relationships with banks such as Cross River Bank and Customers Bancorp have reportedly failed, leaving the exchange with limited options.

The lack of direct banking services has affected Binance.US customers, and the exchange has announced a transition to new banking and payment service providers over the next few weeks. During this transition, some USD deposit services may be temporarily impacted.

For the time being, Binance.US has been holding customer funds through Prime Trust, a financial technology firm. A Prime Trust spokesperson has confirmed that all funds received from clients are stored through its banking partners. Meanwhile, Binance.US has stated that it is working with multiple banking and payment providers in the United States to onboard new partners while upgrading its internal systems to offer additional services.

The challenges faced by Binance.US in securing a banking partner highlights the difficulties that cryptocurrency exchanges face in obtaining banking services. As regulators increase their scrutiny of cryptocurrency firms, it is becoming more challenging for them to operate without direct banking services. The situation is similar in the UK, where banks are increasingly reluctant to accept clients from the cryptocurrency sector.

In conclusion, Binance.US’s struggles in finding a banking partner are a wake-up call for the cryptocurrency industry, which must find ways to work with banks or find alternatives to traditional banking services. For cryptocurrency exchanges to thrive and operate smoothly, they will need the support of banks, regulatory bodies, and the general public.