Binance’s Banking Partner Will Start Ignoring Transactions Under $100K: Report

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Cryp­to mar­kets have been show­ing strong signs of recov­ery – but not every­one is con­vinced, and finan­cial insti­tu­tions are under­stand­ably on their guard.

Accord­ing to the Fed­er­al Deposit Insur­ance Cor­po­ra­tion (FDIC), offer­ing cryp­to prod­ucts and ser­vices should be con­sid­ered a high-risk activ­i­ty by tra­di­tion­al banks.

“Busi­ness mod­els that are con­cen­trat­ed in cryp­to-asset-relat­ed activ­i­ties or have con­cen­trat­ed expo­sures to the cryp­to-asset sec­tor raise sig­nif­i­cant safe­ty and sound­ness con­cerns. (We) will con­tin­ue to close­ly mon­i­tor cryp­to-asset-relat­ed expo­sures of bank­ing orga­ni­za­tions. […] The agen­cies will issue addi­tion­al state­ments relat­ed to engage­ment by bank­ing orga­ni­za­tions in cryp­to-asset-relat­ed activities.”

Binance Breaks The News

Some banks have appar­ent­ly tak­en heed of the recent warn­ing, with imme­di­ate con­se­quences for cus­tomers. Yes­ter­day, Binance addressed its user­base, inform­ing them that one of its part­ners, Sig­na­ture Bank, will cease han­dling fiat-to-cryp­to trans­ac­tions worth less than $100k, accord­ing to Bloomberg.

The new pol­i­cy will take effect on the 1st of Feb­ru­ary as the bank attempts to lim­it its expo­sure to cryp­tocur­ren­cies. Sig­na­ture Bank, an insti­tu­tion that offers finan­cial ser­vices tar­get­ed at small busi­ness­es and exec­u­tive-lev­el pri­vate clients, suf­fered a 64% drop in share price last year.

Aiming to Downsize By Billions

Sig­na­ture Bank also pro­vid­ed ser­vices to the ele­phant in the room, FTX. In order to address the con­trac­tion of the cryp­to indus­try caused by said ele­phant, Sig­na­ture Bank report­ed­ly wants to shed up to $10 bil­lion in deposits belong­ing to busi­ness­es and investors heav­i­ly involved with cryptocurrency.

As a result, some Binance users may be tem­porar­i­ly unable to buy or exchange cryp­to with fiat. Nat­u­ral­ly, this does not affect cryp­to-to-cryp­to exchanges or users’ abil­i­ty to trans­fer their assets to anoth­er plat­form and cash out there.

Binance stressed that Sig­na­ture Bank’s pol­i­cy change will only affect about 0,01% of its user base and that the team is active­ly look­ing for a solu­tion for those who would find them­selves with­out a fiat option for with­draw­al in a week’s time.

It’s unfor­tu­nate that some banks feel the need to dis­tance them­selves from cryp­to due to fears of yet anoth­er indus­try behe­moth col­laps­ing overnight. Nev­er­the­less, this inci­dent should also serve as a reminder to sta­ble insti­tu­tions that cryp­to is no longer seen as an instant gold rush oppor­tu­ni­ty by finan­cial orga­ni­za­tions – and as a result, con­stant dia­logue with these enti­ties is nec­es­sary in order to keep their deci­sions unaf­fect­ed by FUD.

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