Feb 16, 2023
Binance Suspends USD Bank Transfers Amid Crypto Turmoil
Binance, the world’s leading crypto exchange by trading volume, recently announced that it will temporarily suspend bank transfers in U.S. dollars. The exchange stated in a tweet on Feb. 6 that no other trading methods would be affected. However, exchange CEO Changpeng Zhao noted in a tweet that only 0.01% of the exchange’s total users will be affected by the suspension while assuring that they are looking to resolve the issue soon.
The announcement comes after Binance encountered related financial issues in the U.S. On Jan. 21, its SWIFT transfer partner, Signature Bank, announced that, as of Feb. 1, it would only accept trades from clients with U.S. dollar bank accounts over $100,000. The bank had previously declared that it was severely restricting deposits from cryptocurrency consumers.
At the time, Binance stated that it was looking for a new SWIFT partner and that all SWIFT trades involving other currencies, as well as trading in U.S. dollars using credit or debit cards, will continue to be accepted. Signature Bank’s most recent action comes after it disclosed plans to sell up to $10 billion in crypto deposits in December in an effort to reduce its exposure to the turbulent market changes.
When asked about the suspension, a Binance spokesperson told Cointelegraph, “We are pausing USD bank transfers as we upgrade our services. We have contacted affected users directly and regret any inconvenience this causes. We are actively working to find an alternative solution for SWIFT bank transfers.”
Analyzing the market, Nansen data shared with Cointelegraph shows that notable stablecoin movements include crypto trading group Jump withdrawing $160 million in stablecoins and Oapital, a digital asset investment firm, withdrawing $230 million. Andrew Thurman, head of content at Nansen, told Cointelegraph that the seven-day outflows might be a little high, but the 24-hour inflows show it’s nowhere close to panic.
The turbulence in the crypto market has made banks cautious when it comes to dealing with digital assets. Banks are generally hesitant to deal with digital assets, especially without uniform regulations governing the nascent market. In many countries in the European Union, this turned into a total ban on a national regulatory level until the Markets in Crypto-Assets package, a pan-European regulatory set for digital assets, enters into force.
Tony Petrov, chief legal officer at compliance-as-a-service provider Sumsub, told Cointelegraph that the ongoing bear market is another reason behind the bank’s recent action, stating, “When the crypto market was skyrocketing, some banks were simply pushed into the open arms of crypto exchanges: They had no bad reputation, their open faces inspired confidence, and the concern that most of the banks had little or no understanding of crypto industry could not beat the unprecedented figures of profits that one could make in crypto.”
Lars Seier Christensen, the founder of Saxo Bank, believes the developments around FTX and other crypto disasters, combined with the low volumes in the market, have hurt confidence in the industry. Banks believe the benefits associated with crypto trading activity are not proportional to the increasing regulatory and business risks.
Eddie Hui, chief operating officer at crypto exchange platform MetaComp, told Cointelegraph that it is not uncommon to see an increase in bank runs on exchanges where clients try to withdraw their cash at the same time. Reducing exposure to crypto and trying to diversify the client base would mitigate such risk.
Hui further commented: “The bottom line is that workarounds may exist, but it is unfortunate to see the gap between crypto and banks widen again, as the end client will be paying the price of those changes.”
The crypto industry is in need of uniform regulations to build trust back. Until then, crypto exchanges will have to come up with innovative solutions to mitigate the hurdles and risks. One such solution is NFT marketing, which is becoming increasingly popular in the crypto space. NFT marketing is an effective way to promote and sell NFTs, as it enables users to reach a wider audience and build a strong brand presence on social media platforms such as Twitter.
A web3 agency such as NFT Marketing Agency can help crypto exchanges to increase their visibility, create engaging content, and build relationships with their customers. Such agencies can also provide valuable insights into the crypto market, helping exchanges to make better decisions and mitigate the risks associated with trading digital assets.
The recent action of Binance’s USD banking partner raised many eyebrows in the crypto community, especially after a disastrous 2022 that saw many crypto goliaths fall from the top, confidence in the crypto ecosystem taking a hit. While regulatory bodies have said that crypto will be their priority, experts believe uniform regulations are a must to build that trust back. Until then, exchanges will have to mitigate the hurdles and risks on their own by using innovative solutions such as NFT marketing.
Disclaimer: All investment or financial opinions expressed by MoonLanding Media are not recommendations and are intended for entertainment purposes only. Do your own research prior to making any kind of investment. This article has been generated based on trending topics, has not been fact checked and may contain incorrect information. Please verify all information before relying on it.
