Binance, the most prominent cryptocurrency exchange, announced that it had suspended U.S. dollar deposits and withdrawals in a Monday tweet.
It was not immediately clear why the cryptocurrency giant suddenly halted USD bank transfers. However, it stressed that it was working hard to restart the service. Binance downplayed the significance of the move, pointing to the fact that only a minuscule 0.01% of its active users actually use U.S. dollar bank transfers. The suspicion only applies to the exchange’s non-U.S. customers who transfer their funds to or from bank accounts in greenbacks.
Users can still use other methods of buying and selling crypto on Binance such as credit cards without any issues.
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Binance US, an American subsidiary of the cryptocurrency juggernaut, has not been affected by the sudden suspension. BNB, the native exchange token of Binance, held steady in spite of the news.
Last month, Binance about U.S.-based Signature, a crypto-focused bank, pulled the plug on SWIFT fiat transactions for individuals if they were below the $100,000 threshold starting from February.
Traditional banks remain a crucial part of the crypto ecosystem, with companies requiring financial partners for everything from payroll payments to processing inbound customer transactions with fiat currency. While several banks in the United States—including Signature and Silvergate—have built their business strategy around working with crypto companies, the so-called Crypto Winter, in which the prices of major currencies have taken big hits, has brought more reluctance, as regulators crack down.
With Signature and Silvergate both facing financial difficulties, it is also unclear what other banking partners might be available to Binance.
Regulators have shown an unwillingness to approve crypto-focused banks, with policymakers stating that it is important to keep the risky sector segregated from traditional finance.
At the end of January, the Federal Reserve announced it would not approve membership for a digital assets bank, Custodia, which operates as a “special purpose depository institution” in Wyoming.
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