Following the collapse of Silvergate Bank, Silicon Valley Bank and Signature Bank, cryptocurrency companies are looking for new banking partners in the US. According to recent reports citing “sources close to the matter,” Binance US, the cryptocurrency exchange’s U.S. subsidiary, is struggling to find a U.S. banking partner.
According to unnamed sources, Binance has tried to set up a U.S. banking partner without success
The Wall Street Journal (WSJ)reportedon Saturday that Binance US is having difficulty finding a U.S. banking partner. Currently, Binance US customers are beingnotifiedthat “certain U.S. dollar deposit services will be temporarily unavailable”; Binance US says it is “in transition to a new banking partner” and will resume service once the process is complete.
However, sources cited by WSJ reporters Caitlin Ostroff, Rachel Louise Ensign, and Alexander Osipovich indicate that Binance is facing difficulties in finding a banking partner. According to the report, Binance US allegedly tried to establish connections with several specific banks after the collapse of three crypto-friendly US banks.Ostroff’s, Louise Ensign’s, and Osipovich’s reports add:
Binance US has unsuccessfully tried in recent months to establish direct banking relationships with banks, including Cross River Bank, a New Jersey lender that serves some crypto and financial technology companies, and Customers Bancorp Inc, a regional Pennsylvania bank the people said.
The reporter further spoke to a spokesperson for Binance US.” We are working with several US-based banks and payment providers to create a more stable fiat platform and continue to onboard new partners while upgrading internal systems to provide additional services.” It is unclear whether other cryptocurrency businesses are facing similar problems in finding banking partners, but crypto exchange Bittrex recently closed its U.S. operations, citing excessive regulatory scrutiny in the U.S.
On March 27, the U.S. Commodity Futures Trading Commission (CFTC) filed a lawsuit against Binance US’s parent company, Binance Holdings Ltd. for violating trading and derivatives rules. The suit also includes Binance CEO Changpeng Zhao (CZ) and the company’s former chief compliance officer, Samuel Lim. Saturday’s WSJ report stated, “Among the reasons some banks were hesitant to do business with Binance US were concerns about regulatory risk,” according to a person familiar with the matter.
What do you think the future holds in terms of cryptocurrency exchanges partnering with traditional banking institutions, especially with increased regulatory scrutiny? Share your thoughts in the comments section below.
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