Crypto is a way to not rely on institutions and banks. The reality is that most digital-asset businesses need traditional financial firms to provide their customers with an on-and-off connection between their platforms and the world’s traditional currency. This is a growing problem.
Banks that refuse to process wire transfers from the crypto industry are cutting off crypto firms in the US. This is especially true after the turmoil of last year and the increasing regulatory scrutiny.
Binance, the largest crypto exchange in the world, announced Monday that it would stop withdrawing US dollars from bank accounts and depositing them on . Changpeng Zhao, Binance’s chief executive officer, stated on Twitter that banks were “withdrawing support” for crypto. However, he did not give any specific reasons. Binance had last month announced that Signature Bank would no longer handle transactions below $100,000.
Binance US, its American subsidiary, is not affected by the move. However, a spokesperson for international operations stated to CNBC that the company would be partnering with a new partner “in a couple of weeks.” This is a disruptive step. The problem is not unique to Binance.
Historically, crypto companies have had difficulty finding banks and partners to facilitate money transfers in order to buy and sell digital assets. It’s getting more difficult, as regulators are urging banks to be more cautious about doing business with cryptocurrency firms following the collapse of FTX.
Three banks in the US – Silvergate Capital, Signature, and Metropolitan Bank – played a significant role in processing large amounts of US dollars deposits to crypto-platforms. They are now under intense pressure from all sides to unravel the crypto mess.
Signature will remove as much as $10 billion in digital-asset client deposits, while Metropolitan will completely exit the crypto sector. Silvergate is still committed to crypto clients, even though it was hit by a banking crisis last month.
These bank walk-backs could leave more digital platforms without access to dollars. The gateway to real-world money entering the crypto economy is crypto exchanges. Losing wire transfer access to crypto would further isolate digital finance from traditional finance. One industry participant pointed out that the chokehold is worse than it was in 2017.
John Reed Stark, an ex-enforcement official at the US Securities and Exchange Commission, said that “it’s a very alarming sign for both customers and exchanges.” “The bottom line: People are gambling. If you can’t convert chips into cash, then you won’t bother playing the game.”
These are chilling words if you’re a casino operator.
Author
Chris Munch is a professional cryptocurrency and blockchain writer with a background in software businesses, and has been involved in marketing within the cryptocurrency space. With a passion for innovation, Chris brings a unique and insightful perspective to the world of crypto and blockchain. Chris has a deep understanding of the economic, psychological, marketing and financial forces that drive the crypto market, and has made a number of accurate calls of major shifts in market trends. He is constantly researching and studying the latest trends and technologies, ensuring that he is always up-to-date on the latest developments in the industry. Chris’ writing is characterized by his ability to explain complex concepts in a clear and concise manner, making it accessible to a wide audience of readers.
