- The recent failures of Silvergate and Signature Bank left Binance.US without banking services.
- Binance.US is looking for a new bank partner to serve as a fiat on-ramp and off-ramp for its clients in the US.
- A WSJ report has however indicated that the exchange is facing challenges in identifying the bank partner.
Binance.US, the United States arm of global crypto exchange Binance, is in the process of identifying a new bank partner that will serve as a fiat on-ramp and off-ramp. The crypto exchange was left with a bank partner after the collapse of the Silvergate and Signature Bank.
However, according to a report published by the WSJ on April 8, Binance.US has been facing challenges in establishing a new bank partner. According to the report, the exchange has been depending on middleman banks to store funds.
Currently, Binance.US is holding customer funds through the financial technology firm Prime Trust’s banking partners.
Regulatory crackdown on banks with crypto clients
Binance.US has had a number of attempts in establishing a direct banking relationship with the likes of Cross River Bank and Customers Bancorp, but they have all failed.
The regulatory crackdown in the US on banks with cryptocurrency clients is seen as a major factor contributing to the struggles the exchange is facing in identifying a new banking partner.
Binance has been the focus of the US Commodity Futures Trading Commission (CFTC) investigation since 2021. The CFTC sued Binance Holdings and its CEO, Changpeng “CZ” Zhao, last month for alleged trading violations. And although CZ issued a statement refuting CFTC’s allegations, the lawsuit has had a significant effect on the exchange including leading to a drop in the exchange’s crypto market share.
The absence of a direct bank has greatly affected Binance.US customers, especially after Binance said that some US dollar deposit services would be temporarily affected as it transitions to new banking and payment service providers over the next few weeks.