The US arm of the global cryptocurrency exchange Binance is struggling to find a banking partner after the collapse of Signature Bank and Silvergate Bank, The Wall Street Journal reported.
Banking Woes for Binance US
While searching for a key banking partner, Binance US is now using the services of at least one intermediary bank for holding cash deposits from crypto traders on the platform. The services of an intermediary bank rather than a direct banking partner slow the exchange services for customers like deposits and withdrawals of US dollars.
Previously, Binance US used the services of Signature Bank and Silvergate Bank as its only two banking partners in the US for customer deposits. However, both the crypto-friendly banks failed last month: Silvergate declared voluntary liquidation, and Signature Bank went under FIDC receivership.
The report outlined that Binance US unsuccessfully sought the direct banking services of multiple lenders, including New Jersey-based Cross River Bank and Customers Bancorp Inc., a Pennsylvania-based regional bank.
“We work with multiple U.S.-based banking and payment providers and continue to onboard new partners while upgrading our internal systems to create a more stable fiat platform and offer additional services,” said a Binance US spokesperson.
Now, Binance US uses Prime Trust LLC, a crypto services and financial technology firm, for storing customer cash. Prime Trust confirmed that it deposits the customer cash with a network of banking partners.
Additionally, the exchange faces USD deposit and withdrawal issues as it is “transitioning to new banking and payment service providers over the next several weeks.” Though it reinstated wire transfers, services with debit cards, Apple Pay, and Google Pay are unavailable.
Troubles of Binance in the US
Binance, the largest crypto exchange in terms of trading volumes, is facing massive regulatory backlash in the US. Last month, the Commodity Futures Trading Commission (CFTC) sued Binance and its CEO, Changpeng Zhao, for various regulatory violations.
The exchange is reportedly facing investigations from the Securities and Exchange Commission and the Justice Department; however, they have not pressed any charges yet.
On top of that, the operations of Binance are facing setbacks outside the US. Binance Australia Derivatives, operated by Oztures Trading Pty Ltd, recently lost its Australia Financial Services (AFS) license. Though Binance requested the withdrawal, it came after a regulatory hearing.
Meanwhile, Binance recently expanded its services in inflation-hit Argentina where people can now trade cryptocurrencies directly on the exchange with local pesos.
This article was written by Arnab Shome at www.financemagnates.com.