Binance Could Feel Sting of Bank’s New Crypto Limit
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Banks serving the crypto space have been high-profile casualties amid Bitcoin declines.
Dreamstime
Signature Bank
is putting even more distance between itself and digital assets—and its decision could ding the world’s largest cryptocurrency exchange, Binance.
Signature Bank
(ticker: SBNY), an FDIC-insured institution that was early to the crypto game, won’t support individual crypto customers who buy or sell amounts less than $100,000, Binance told Barron’s on Monday.
“This is the case for all of their crypto exchange clients,” a Binance spokesperson said.
The policy, which goes into effect in February, won’t allow customers to use the international banking network known as SWIFT—the Society for Worldwide Interbank Financial Telecommunication. Signature Bank was one of Binance’s U.S. SWIFT partners.
Signature’s move affects 0.01% of Binance’s average monthly users and won’t affect the exchange’s functions, including the buying and selling of crypto with a credit card or other fiat currency such as the euro.
“We are actively working to find an alternative solution,” the spokesperson said.
Signature’s decision, reported over the weekend by Bloomberg News, shouldn’t come as a surprise.
The bank stepped back from digital assets in December after a year of turbulence and was aiming to slash deposits linked to crypto. Limiting the use of SWIFT for customers trading crypto on Binance is a logical next step for a bank limiting its reputational and financial exposure to a volatile asset.
Analysts had mixed reactions to Signature’s December step-back: the slashing of crypto deposits to less than 15% of total deposits. The analysts noted that walking away from some $10 billion would usher in funding pressures.
Signature’s fourth-quarter earnings showed that digital asset-customer deposits in 2022 plunged by $12.4 billion, with total deposits at $88.6 billion. The bank’s stock price dropped almost 60% in the past year.
Silvergate Capital
(SI), another regulated way to play the crypto boom, suffered even more. Silvergate has seen its stock price collapse 85% in 12 months.
So far, though, Signature and Silvergate have mostly just hurt themselves—and investors. Now Signature’s shift is proving to have wider consequences across crypto, and big banks fleeing digital assets are another reason to be skittish on
Write to Jack Denton at jack.denton@barrons.com
