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Following the collapse of Silvergate Bank, Silicon Valley Bank, and Signature Bank, cryptocurrency companies have been seeking new banking partners in the United States. According to a recent report citing “sources familiar with the matter,” Binance US, the American subsidiary of the cryptocurrency exchange, is having difficulty finding a U.S. banking partner.
The Wall Street Journal (WSJ) reported on Saturday that Binance US is experiencing difficulty in finding a U.S. banking partner. Currently, Binance US customers have been informed that “certain USD deposit services will be temporarily unavailable.” Binance US stated that it was “transitioning to a new banking partner,” and services would resume once the process was complete.
However, sources quoted by WSJ reporters Caitlin Ostroff, Rachel Louise Ensign, and Alexander Osipovich indicate that Binance has faced challenges in finding a banking partner. The report states that Binance US has allegedly attempted to establish connections with several specific banks following the collapse of the three crypto-friendly U.S. banks. Ostroff’s, Louise Ensign’s, and Osipovich’s report adds:
Binance US has unsuccessfully sought to establish direct banking relationships with banks including Cross River Bank, the New Jersey-based lender that serves some crypto and financial-technology firms, and Customers Bancorp Inc., a Pennsylvania-based regional bank, in recent months, the people said.
The reporters further spoke with a spokesperson from Binance US, who stated, “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.” It is uncertain whether other cryptocurrency businesses are facing similar issues in finding banking partners, but the crypto exchange Bittrex recently closed its U.S. operations, citing excessive regulatory oversight in the United States as the reason for the shutdown.
On March 27, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance Holdings Ltd., the parent company of Binance US, alleging violations of trading and derivatives rules. The lawsuit also includes Binance CEO Changpeng Zhao (CZ) and the company’s former chief compliance officer, Samuel Lim. The WSJ report on Saturday stated that “among the reasons that some banks were hesitant to do business with Binance US was concern over regulatory risk,” according to sources familiar with the matter.
What do you think the future holds for cryptocurrency exchanges in terms of partnering with traditional banking institutions, especially in light of increased regulatory scrutiny? Share your thoughts in the comments section below.
Jamie Redman is the News Lead at Bitcoin.com News and a financial tech journalist living in Florida. Redman has been an active member of the cryptocurrency community since 2011. He has a passion for Bitcoin, open-source code, and decentralized applications. Since September 2015, Redman has written more than 6,000 articles for Bitcoin.com News about the disruptive protocols emerging today.
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