Binance’s US business has suffered from regulatory issues, including banking partner shortages and consumer service outages.
Recent regulatory difficulties are having a significant impact on Binance’s US business. The exchange is having trouble locating banking partners in light of the most recent dispute with the Commodity Futures Trading Commission (CFTC). Binance cannot properly serve its US consumers without these partners.
Customers, for instance, complained that it was difficult to withdraw fiat money from the exchange. Furthermore, deposits made through wire, Apple Pay, or Google Pay are no longer supported on Binance.US.
The WSJ reported on Saturday that at least two banks rejected Binance.US business in recent months. Cross River Bank and Customers Bancorp Inc. cited regulatory issues in their refusal to do business with the exchange.
Silvergate and Signature Bank, Binance’s former US financial partners, both went under this year. Binance was left after the failure of two crypto-friendly banks.US frantically searching for at least one US successor.
To keep user assets in the interim, Binance.US uses a number of crypto services as well as a fintech company named Prime Trust LLC. However, this won’t work for the exchange in the long run and has already led to service interruptions.
Binance will fight a significant CFTC lawsuit
Binance allegedly marketed unregistered derivatives to US investors, according to the CFTC. Additionally, it is claimed in the case that Binance engaged in market manipulation and exploited its power to trade against its users.
Coinbase and other US cryptocurrency exchanges are still collaborating with US banks. Coinbase partner and USDC issuer Circle announced the addition of Cross River as a banking partner on March 13.
On the other hand because banks are reluctant to cooperate with cryptocurrencies, it’s possible that ultimately cryptocurrencies may establish their own decentralized services to take the place of banks.
In recent months, there have been a lot more bank runs in the US banking sector. Supporters of cryptocurrencies promote a decentralized replacement for the existing system.
The difficulty Binance had in locating banking partners serves as a reminder of how centralized the US financial system is.