Binance banking problems highlight a divide between crypto firms and banks

Binance, the world’s leading crypto exchange by trading volume, will temporarily suspend bank transfers in U.S. dollars. The exchange stated in a tweet on Feb. 6 that no other trading methods would be affected. The announcement came with no explanation. However, exchange CEO Changpeng Zhao noted in a tweet that only 0.01% of the exchange’s total users will be affected by the suspension while assuring that they are looking to resolve the issue soon.

Recently, Binance encountered related financial issues in the U.S. On Jan. 21, its SWIFT transfer partner, Signature Bank, announced that, as of Feb. 1, it would only accept trades from clients with U.S. dollar bank accounts over $100,000. The bank had previously declared that it was severely restricting deposits from cryptocurrency consumers.

At the time, Binance stated that it was looking for a new SWIFT partner and that all SWIFT trades involving other currencies, as well as trading in U.S. dollars using credit or debit cards, will continue to be accepted.

Signature Bank’s most recent action comes after it disclosed plans to sell up to $10 billion in crypto deposits in December in an effort to reduce its exposure to the turbulent market changes. “We are not a cryptocurrency bank. We don’t want to be obligated to any particular sector or client,” Joe DePaolo, the bank’s CEO, said at the time.

A Binance spokesperson told Cointelegraph, “We are pausing USD bank transfers as we upgrade our services. We have contacted affected users directly and regret any inconvenience this causes,” adding:

“We are actively working to find an alternative solution for SWIFT bank transfers. We have since paused all USD bank transfers as we work to upgrade the service. 0.01% of our average monthly users use U.S. bank transfers.”

Nansen data shared with Cointelegraph shows that notable stablecoin movements include crypto trading group Jump withdrawing $160 million in stablecoins and Oapital, a digital asset investment firm, withdrawing $230 million.

Andrew Thurman, head of content at Nansen, told Cointelegraph, “Jump and Oapital are large players who routinely sling around large sums, however, and it’s difficult to fully attribute the movements to the banking announcement. I’d say the seven-day outflows might be a little high, but the 24-hour inflows show it’s nowhere close to panic.”

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