Feb 17, 2023
Binance Temporarily Suspends USD Bank Transfers
Binance, the world’s leading crypto exchange by trading volume, recently announced that it will temporarily suspend bank transfers in U.S. dollars. This announcement came with no explanation, however, exchange CEO Changpeng Zhao noted that only 0.01% of the exchange’s total users will be affected by the suspension. He also assured that they are looking to resolve the issue soon.
The suspension of USD bank transfers 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.
Nansen data 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 while the seven-day outflows might be a little high, the 24-hour inflows show it’s nowhere close to panic.
Turmoil in crypto market makes banks cautious
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.
For banks, the most important thing is to remain part of the financial system, and if they feel that they could be cut off because they took too much risk, they will simply not take it to begin with. 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.
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.
Clearly, the more difficult the access, the fewer new clients and deposits will find their way onto exchanges, adding to the problems they are already having with low volume. Talking about how crypto exchanges can mitigate this hurdle, he explained that crypto businesses will make an effort to “reinstate their reputation, and for that, they will need more stringent compliance infrastructure.”
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. He added that, in the case of Silvergate, the restriction they imposed was on transactions below $100,000.
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 need to mitigate the hurdles and risks on their own.
NFTs and crypto promotion
The suspension of USD bank transfers is a setback for crypto exchanges, but it does not mean that the crypto industry is doomed. On the contrary, the crypto industry is still growing and innovating. One of the most exciting developments in the crypto space is the emergence of Non-Fungible Tokens, or NFTs.
NFTs are digital assets that are unique and cannot be exchanged for other digital assets. They are being used to create digital art, music, and collectibles, and are becoming increasingly popular as a way to promote crypto projects.
Twitter NFT marketing is becoming an increasingly popular way to promote crypto projects. NFT marketing agencies are popping up all over the web3 space, and they are helping crypto projects to create and promote NFTs. These agencies are also helping crypto projects to sell NFTs and to create campaigns that can help to increase the visibility of their projects.
The crypto industry is still in its infancy, and there are still many challenges that need to be addressed. But the industry is growing, and there are many exciting opportunities for those who are willing to take the risk and invest in the crypto space. With the right approach, crypto projects can still succeed, even in the face of challenging times.
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.
