Binance.US relies on intermediary to store user funds as crypto exchange struggles to find banking partner: Report
The US arm of leading crypto exchange Binance is looking for a new banking partner after Silvergate Capital and Signature Bank collapsed last month.
The Wall Street Journal reports that Binance.US is struggling to find a bank that will directly hold customers’ cash after the failure of Signature and Silvergate, which were the two most used banks for US crypto firms.
The exchange reportedly failed to establish direct banking relationships with New Jersey-based lender Cross River Bank, which houses crypto and financial technology firms, and Pennsylvania-based regional bank Customers Bancorp Inc.
People familiar with the matter reportedly say some banks are reluctant to do business with Binance.US in part because of regulatory risks now facing Binance and its CEO Changpeng Zhao costs for allegedly violating the compliance rules of the Commodity Futures Trading Commission (CFTC).
As a solution to the situation, Binance.US reportedly uses at least one intermediary to store customers’ funds. The exchange is said to be dependent on crypto services firm Prime Trust, which stores funds from customers with its network of banking partners.
The sources say that the process of moving and sending funds can be slower as a result of customers’ cash being held in the intermediary’s banks. Users also experience disruptions in some services. For example, Apple Pay and Google Pay deposits are temporarily unavailable.
Says Binance.US website,
“Due to recent developments in the banking industry, Binance.US will be transitioning to new banking and payment service providers in the coming weeks. Some USD deposit services will be temporarily affected during the transition.”
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