On April 8, the Binance US arm pursuit of a banking partner failed to yield the desired result. A report from people privy to the matter revealed that Binance has been seeking to engage a suitable banking partner following the fallout of the Signature Bank.
Initially, Binance had closed business deals with the now-defunct Signature and Silvergate Capital to improve the reliability and security of the financial transaction. Based on the terminated business agreement between the crypto exchange and Silvergate Capital, Binance had implemented policies that allowed deposits and withdrawals to be executed by the financial institution.
Impact of the Collapse of Signature and Silvergate Banks
In March, the after- effect of the fallout of the Bahamian crypto exchange FTX resulted to the closure of Signature and Silvergate Capital. It was reported that Silvergate and Signature Bank depository customers made massive withdrawals that affected the financial stability of the banks.
Since last November, the embattled financial providers have struggled to survive the unfavorable banking conditions. After the closure of Binance’s banking partners, the crypto firm has been relying on services provided by intermediary financial providers.
On a separate address, Binance revealed that depending on third-party banking services exposed the firm to delays that interfered with daily operations. As a result, the Binance management team has been at the forefront in pursuing a stable financial providers in the US.
How Will Crypto Regulation Affect Banking Sector?
Reportedly, the Binance team had approached Cross River Banks and Customer Bancorp Inc. to seek support in provision of financial services. The numerous business discussions between Binance and banks have been futile due to the current adoption of stringent crypto regulation in the US.
Despite the failed attempt to acquire a banking partner, Binance plans to restructure the internal financial system to allow the customers to engage in off and on-ramping activities. The improvement in the Binance fiat transaction aligns with the ongoing pursuit of a banking partner.
According to Binance, after finding the right banking partner, the crypto exchange plans to leverage its expertise to increase the number of financial customers. Also, Binance will align its daily activity with the long-term goal to ensure the existing practices meet future banking needs.
Why are Banks Rejecting Crypto Firms?
A few days ago, it was reported that financial providers in the UK adopted strict policies that suspended and terminated business deals between the bank and crypto firms.
The April 3 report shared by affected crypto firms in the UK stated that banks demand more documentation to monitor traders’ transactions. This has exposed crypto firms to lengthy processes to comply with the regulations.
On the contrary, the financial institutions in the UK argued that the launch of new crypto regulation has necessitated banks to adopt stricter policies. The stringent digital asset regulations in the UK mirror the ongoing amendments of crypto policies in the US.
In March, the Commodity Futures Trading Commission (CFTC) regulators accused Binance and the top executive of contravening US regulations. Elsewhere, the Australian regulators took legal action against Binance for falsely classifying wholesale clients.
At the time of writing 1610 UTC, the fourth largest crypto asset, BNB, trades at $312.14, a 0.46% increase in the last 24 hours. According to CoinMarketCap data, BNB has hovered around $310.45 and $313.16 over the day.
