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Following the collapse of Silvergate Bank, Silicon Valley Bank and Signature Bank, cryptocurrency companies have sought new banking partners in the US. According to a recent report citing “sources familiar with the matter”, Binance US, the US subsidiary of the cryptocurrency exchange, is having trouble finding a US banking partner.
The Wall Street Journal (WSJ) reported on Saturday that Binance US is having trouble finding a US banking partner. Currently, Binance US customers have been informed that “certain USD deposit services will be temporarily unavailable.” Binance US stated that they were “transitioning to a new banking partner” and services would resume once the process was complete.
However, sources cited 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 US banks. Ostroff, Louise Ensign and Osipovich’s report adds:
Binance US has tried unsuccessfully 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 are working with several US-based banking and payment providers and continue to bring on board new partners as we upgrade our internal systems to create a more stable fiat platform and offer additional services .” It is uncertain whether other cryptocurrency companies face similar problems in finding banking partners, but crypto exchange Bittrex recently closed its US operations, citing excessive regulatory oversight in the US as the reason for the shutdown.
On March 27, the US Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance Holdings Ltd., the parent company of Binance US, alleging violations of trading and derivatives regulations. 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 some banks were hesitant to do business with Binance US was concern about regulatory risk,” according to sources familiar with the matter.
What do you think the future holds for cryptocurrency exchanges in terms of working with traditional banking institutions, especially in light of increased regulatory scrutiny? Share your thoughts in the comments section below.
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