Binance, one of the world’s largest cryptocurrency exchanges, announced that the New York-based Signature Bank would handle transactions from its users only if it exceeds $100,000. This move comes as the bank decreases its exposure to digital-asset markets. Accordingly, users may need to use SWIFT bank transfers to buy or sell cryptocurrency for amounts less than $100,000.
Signature Bank tightens rules for Binance transactions
The retail customer base of Binance has been made aware of a potential impending service outage that could stop on- and off-ramp bank payment transfers.
The world’s largest crypto exchange stated that this was the banking partner’s choice and that the adjustment would affect other trading platforms. This change applies to all customers who trade cryptocurrencies.
Binance warned that users would only utilize their bank accounts to buy or sell cryptocurrency with USD via SWIFT after Feb. 1, 2023, only if they can come up with an alternative. However, SWIFT-based transfers for currencies besides the U.S. dollar, like the Euro, would still be available.
According to a Binance representative, no other banking partners are affected. Financial institutions utilize the SWIFT network to send information and commands.
However, Binance emphasized that consumers would continue trading cryptocurrencies using credit or debit cards. Transactions to or from third-party platforms would continue to be handled.
Signature and Silvergate Capital shares drop amid digital asset market concerns
Traditional financial institutions like Signature Bank and Silvergate Capital are concerned about a financial contagion in the market for digital assets. After the bank announced that its clients withdrew nearly $8.1 billion in deposits of digital assets during the fourth quarter, their shares had fallen as much as 40%. Last year, shares of Signature Bank decreased by 64%.
In the wake of the FTX collapse, Signature Bank announced in December that it planned to withdraw up to $10 billion in deposits from clients who held digital assets as it began a general withdrawal from the cryptocurrency market.
The Federal Deposit Insurance Corporation (FDIC) warned about the dangers of crypto assets, which prompted this adjustment. Banks chartered by U.S. states that do not participate in the Federal Reserve System are primarily regulated by the FDIC at the federal level.
In a statement on Jan. 5, the FDIC said that banking organizations are not barred or deterred from offering banking services to clients of any particular class or type. However, those whose business models heavily focus on cryptocurrency-related activities or have concentrated exposures to the industry raise severe safety concerns and reliability doubts.