Binance.US Goes Crypto-Only While UK Halts Onboarding of New Users

Cryptocurrency exchange Binance.US has updated its Terms of Use, implying that direct withdrawals in USD will no longer be supported. The updated Terms of Use ask users to convert USD into stablecoins for withdrawals, raising both applause and concern on social media.

“In the event you wish to withdraw U.S. dollar funds from your Account, you may convert such U.S. dollar funds to stablecoin or other digital assets, which can subsequently be withdrawn.”

the best way for Binance to get exit liquidity without dropping crypto prices. CZ playing chess while depositors are playing checkers.
— Quantum_Trader ( FX + Crypto ) (@QTrader_Pro) October 17, 2023

The amended section also says that dollar funds are held by BAM (Binance.US) in omnibus accounts at unspecified intermediaries selected by the exchange. It also reminds users that digital assets are not eligible for Federal Deposit Insurance Corporation (FDIC) insurance protections, which usually cover up to $250,000 per creditor when it comes to insured banks.

Binance.US has already temporarily halted withdrawals once this summer, shortly after the SEC sued the exchange, international arm Binance and its founder CZ.

The SEC has taken to using extremely aggressive and intimidating tactics in its pursuit of an ideological campaign against the American digital asset industry. https://t.co/AZwoBOgsqS and our business partners have not been spared in the use of these tactics, which has created… pic.twitter.com/rlIe6swIoY
— Binance.US 🇺🇸 (@BinanceUS) June 9, 2023

Binance.US quickly managed to resolve the issue, but warned that their banking partners were expected to discontinue the service in the near future. Four months later, this day appears to have arrived. At the time, the exchange announced its transition to a crypto-only exchange, meaning that it would no longer accept USD deposits and withdrawals — until the exchange found new stable banking partners.

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This situation reflects that of the main Binance exchange in Europe. Last month Binance asked European users to convert their EUR balances to USDT as one of its key payment solutions providers, the U.K.-based Paysafe, ceased processing EUR deposits and withdrawals. Paysafe had already stopped processing GBP transactions earlier this year.

The end of GBP payments was just one part of Binance's troubles in the U.K. On October 8th, the Financial Conduct Authority (FCA) introduced a new crypto marketing regime, and within the first 24 hours issued 146 alerts about malicious cryptoasset promotions. According to the FCA, Binance is not permitted to undertake any regulated activity in the country (this applies since 2021), and must market itself in compliance with the new regulations.

Binance initially partnered with Rebuildingsociety.com, but this didn’t work out. The exchange is now looking for another suitable FCA-authorised firm, and has meanwhile stopped accepting new customers in the country starting from October 16th.

Binance has been going through a turbulent time in Europe of late. It has recently exited multiple European countries, despite its stated intentions to focus on compliance with MiCA regulations. And this week, Stéphanie Cabossioras stepped down from her role as the executive director of Binance France.

This comes on the back of an exodus of staff from the legal and compliance units this summer amid regulatory investigations, and the loss of Brian Shroder, CEO and president of Binance.US, who left the exchange in mid-September.