It’s Bad News: Binance Has Suspended The Acceptance of US Dollar Transfers.
This year, the Crypto market has been kind to its investors. So far, market momentum is positive, and some are already anticipating a repetition of 2019.
At the time, Bitcoin’s growth corresponded with a high in the Federal Reserve’s monetary policy. That is analogous to the current period.
Many analysts believe the Fed will scale down its rapid interest rate rises, which have harmed riskier assets such as cryptocurrencies and technology stocks.
Investors are also tired following the so-called crypto winter, which crushed prices late last year. As a result, investors gradually returning to the market, along with a more accommodating Fed, constitute an unexpected mix that is driving up prices.
In mid-2019, the bullish trend caused the world’s largest cryptocurrency to triple (up 247%) to $13,800. According to research firm CoinGecko, Bitcoin prices have increased 39% this year to $23,004.24. The cryptocurrency market is now worth $1.12 trillion, up 1.6% in the last 24 hours.
Investors who watched the value of their coins fall in 2022 appear relieved. As a result, they are more likely to dismiss negative news, such as the November collapse of Sam Bankman-FTX Fried’s cryptocurrency exchange and linked hedge fund Alameda Research.
Binance Has Suspended US Dollar Transfers
The consequences of this disaster are still being evaluated. And now, Binance, the world’s largest cryptocurrency exchange, has taken a decision that it claims is related to the FTX issue.
The site momentarily restricted deposits and withdrawals in US currency from bank accounts.
This implies that investors who wish to acquire currencies like Bitcoin, Ether, Solana, Dogecoin, and Cardano will no longer be able to transfer US money from their bank accounts to the site. Investors who wish to sell their currency cannot get US dollars to deposit into their accounts.
However, other fiat currencies, such as euros and the British pound, remain unaffected.
“We are temporarily suspending USD bank transfers as of February 8,” a spokesperson said in an emailed statement. “Affected customers have been notified directly. It’s worth noting that only 0.01% of our monthly active users leverage USD bank transfers, but that we are working hard to restart service as soon as possible.”
“In the meantime, all other methods of buying and selling crypto, including bank transfers using one of the other fiat currencies supported by Binance (including Euros), buying and selling crypto via credit card, debit card, Google Pay, Apple Pay, and via our Binance P2P [peer-to-peer] marketplace, remain unaffected” said the spokesperson.
Binance US, Binance’s autonomous US company, is unaffected by the ban on US dollar payments, according to a spokesperson.
Banks Are Hesitant to Collaborate with Cryptocurrency Firms
Binance’s decision was not unexpected. Traditional banks are frequently hesitant to collaborate with crypto businesses to mitigate the risks connected with the fact that the anonymity prevalent in the crypto industry promotes money laundering and other illegal transactions.
Traditional banks must extend their risk-oversight teams by forming partnerships with crypto businesses. Many financial institutions would rather avoid this added effort, especially because most cryptocurrency firms are not publicly traded and hence have no duty to be transparent about their activities.
Following the FTX disaster, regulators complained to banks about the hazards of doing business in the crypto sphere.
Changpeng Zhao, co-founder and CEO of Binance tweeted on February 6 that although some banks are abandoning support for cryptocurrency, others are going in. The circumstances of last year were expected to cause some difficulties. Continue to build in the long run.
He nonetheless acknowledged that “this is still a bad user experience and the team is working on quickly resolving this issue.”
In January, Binance said its banking partner, Signature Bank, had agreed to process investor transactions only if they involved amounts greater than $100,000. The financial company’s decision reflected a desire to reduce its stake in digital assets.
