Binance.US, the American arm of the popular global cryptocurrency exchange, is facing challenges in finding banking partners to facilitate the conversion of fiat currency to and from cryptocurrencies for its customers in the United States, media reports said.
A recent Wall Street Journal report revealed that both Signature and Silvergate Bank, which previously provided banking services for Binance.US, have stopped offering their services to the exchange, forcing the platform to rely on middleman banks to store funds on its behalf.
Sources familiar with the matter cited regulatory scrutiny on banks with crypto clients as one of the factors contributing to the platform’s struggles in finding a new banking partner. Binance Holdings and its CEO Changpeng Zhao (CZ) were sued for alleged trading violations by the Commodity Futures Trading Commission (CFTC) in March. This legal action is part of an ongoing investigation into the exchange by the CFTC, which has spotlighted Binance’s compliance measures.
Binance.US requires a banking partner to hold its clients’ US dollars directly to operate efficiently in the US. Despite efforts to establish direct banking relationships with Customers Bancorp and Cross River Bank, Binance.US has reportedly faced difficulties, with these attempts allegedly failing to secure the necessary services. The dearth of direct banking services has impacted Binance.US customers, prompting the exchange to announce a transition to latest banking and revenue service providers in a recent status update. During this transition, some US dollar deposit services will be temporarily affected.
Presently, Binance.US relies on financial technology enterprise Prime Trust to hold customer funds. According to a representative from Prime Trust, the financial technology firm stores all customer funds through its banking associates.
Binance.US has responded to the recent banking issues by stating that it is working on upgrading its internal systems and creating a more steady fiat platform that will offer additional benefits. Despite the challenges, the exchange has also been actively seeking new banking partners to serve its US clients. Financial institutions in the UK are increasingly reluctant to work with clients from the cryptocurrency sector.
