Crypto exchange Binance told users that they would be unable to buy or sell cryptocurrencies less than $100,000 via SWIFT from February 1, according to a January 21 email statement.
The crypto exchange blamed the new decision on an unnamed banking partner. It said the bank was restricting access for all of its “crypto exchange clients.” As of press time, no new crypto exchange had announced a similar restriction.
Meanwhile, Bloomberg reported on January 21 that Binance’s unnamed banking partner was Signature bank.
Binance said the disruption does not affect its other services or “Corporate Accounts.” The exchange users can continue to purchase crypto using their credit or debit card and through other fiat currencies, including Euros. It added that it was “actively working” to find an alternative solution for the SWIFT USD situation.
Traditional Finance Companies Fear Crypto Contagion
Traditional financial institutions like Silvergate Capital and Signature Bank have begun moves to cut their crypto exposures to protect them from the crypto industry contagion. These banks had established themselves as crypto-friendly financial institutions, but recent events have forced a rethink.
Following FTX’s collapse in November, Silvergate experienced a bank run that saw it process around $8.1 billion in withdrawals. The leading crypto bank posted a $1 billion net loss in the fourth quarter of 2022. The bank said it was “offboarding certain non-core customers and eliminating a portion of its product portfolio” to ensure its business remains resilient.
More recently, Silvergate revealed it had a $2.5 million exposure to bankrupt crypto lender Genesis.
Meanwhile, Signature bank said it was looking to cut its crypto deposits by as much as $10 billion. Signature Bank’s CEO Joe DePaolo reportedly said the Wall Street bank would reduce these deposits to less than 15% of its total deposits.
On January 5, a joint statement from U.S. financial agencies warned about crypto-asset risks to banking organizations. The regulators said businesses with concentrated exposure to crypto raise safety and soundness concerns. They added that issuing or holding crypto assets as principal is “inconsistent” with safe banking practices.
BeInCrypto has reached out to company or individual involved in the story to get an official statement about the recent developments, but it has yet to hear back.