On January 21, Binance announced that users won’t be able to purchase or sell cryptocurrencies with a value of less than $100,000 using the SWIFT system starting February 1.
The crypto exchange attributed the new directive to one of its banking partners, alleging that this partner was denying access to all of its “crypto exchange clients”. To date, no other crypto exchange has reported a similar restriction.
On January 21st, Bloomberg reported that Signature bank was the unnamed banking partner of Binance.
Binance reported that the incident had no impact on their other services or “Corporate Accounts.” The exchange users can still buy crypto with their credit or debit cards and through other fiat currencies, including Euros. It was also noted that they are actively searching for an alternative to the SWIFT USD issue.
Anxiety Rises Amongst Established Financial Institutions Concerning Crypto Influence
Silvergate Capital and Signature Bank have taken steps to decrease their involvement in the crypto sector in order to protect themselves from the potentially negative effects. These banks had been open to dealing with cryptocurrencies, but recent occurrences have caused them to rethink their stance.
According to Silvergate disclosure, the leading cryptocurrency bank experienced a net loss of $1 billion in the fourth quarter of 2022.
In order to ensure the longevity of their firm, they also stated that they were “offboarding certain clients that weren’t fundamental to their business and deleting some of their product offerings.”
Recently, Silvergate disclosed that they have a total $2.5 million exposure to the now-defunct cryptocurrency lender, Genesis.
In the meantime, Signature Bank announced their plan to reduce crypto deposits by up to $10 billion.
Wall Street bank Signature Bank would cut these deposits to less than 15% of its overall deposits, according to CEO Joe DePaolo.
A joint statement from U.S. financial agencies issued on January 5th highlighted the dangers that crypto assets pose to banking institutions. Businesses having significant exposure to cryptocurrencies, according to the regulators, pose safety and soundness issues.
They continued by stating that it is “inconsistent” with secure banking procedures to issue or hold crypto assets as primary.
Resources: Beincrypto
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