Binance, the major crypto currency exchange, has revealed that its SWIFT partner, Signature Bank, will begin restricting U.S. dollar payments for amounts less than $100,000.
This information was communicated to Binance’s users on January 21 through email, and the crypto currency exchange rapidly discovered numerous other businesses that used the bank had been impacted.
Bloomberg reports (1) that Signature Bank is looking for ways to reduce its involvement in crypto currency. It’s possible that worries about contagion were a factor in the 64% drop in the company’s share price during the last year.
A Lot of Financial Institutions and the General Public are under the impression that it is hazardous for businesses to have exposure to volatile assets such as crypto currency. Silvergate Bank experienced similar problems. The Federal Deposit Insurance Corporation (FDIC) made the following statement back in January of this year:
“Safety and soundness issues are raised by business models either centered on crypto-related operations or exposed to the crypto-asset market.”
Following the failure of the FTX Exchange, Signature Bank announced that it would withdraw from the crypto currency business. This was to return up to $10 billion in client deposits using crypto currencies.
A considerable number of retail customers will be negatively impacted, and the bank’s deposits will experience a significant decrease as a result.
Binance is Looking at SWIFT Alternatives
Binance has lately ceased allowing repeated withdrawals, even though the decision to interrupt payments did not originate with Binance.
In November, it placed a temporary hold on deposits of USDT and USDC based on the Solana platform. In addition, it stopped accepting deposits and withdrawals in Ether (ETH) & wrapped Ether (wETH) during the Ethereum Merge.
Binance has set the record straight, adding that other crypto currency organizations have received communication from Signature Bank regarding its decision about USD transfers.
This was done to prevent similar interpretations from being given. In addition, it has been emphasized that the team is actively looking for a new SWIFT partner. It said there:
“To prevent service delays, our team is actively looking for a new SWIFT (USD) partner.”
The discussion revealed that Signature Bank barely serves 0.01% of the average monthly consumers of its services. In addition, it noted that the decision by Signature would not affect any of its other banking partners.
Credit and debit card purchases will be accepted for purchasing and selling crypto currencies. However, direct bank transfers in the United States Dollar for amounts less than $100,000 will not be available.
It will also be able to make payments using other fiat currencies that Binance is willing to accept, such as euros.
Binance will continue to enable deposits and withdrawals made through third-party exchanges, providing users with an option. The decision made by Signature bank will not impact the peer-to-peer marketplace that is part of the exchange.
