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<ul><li>Binance&#39;s banking issues have brought to light a stark contrast between cryptocurrency companies and traditional banks</li><li>This divide has become increasingly apparent as the crypto industry continues to grow and evolve</li><li>Banks are often hesitant to work with crypto firms due to the lack of regulation and the potential for money laundering</li></ul><h2 id="header-0">Experts are starting to issue warnings about a growing link between crypto companies and conventional banks as exchanges lose banking partners.</h2>Binance, the world&#39;s leading <a href="https://www.coingabbar.com/en/crypto-blogs-details/proof-of-reserves-of-leading-crypto-exchanges-are-live-on-coingabbar-a-stride-towards-transparency" rel="noopener noreferrer nofollow">crypto exchange</a> by trading volume, has announced that it will temporarily suspend bank transfers in U.S. dollars. The exchange stated in a tweet on Feb. 6 that no other trading methods would be affected. However, CEO Changpeng Zhao noted in a tweet that only 0.01% of the exchange’s total users will be affected by the suspension while assuring that they are looking to resolve the issue soon.This announcement comes after Binance encountered related financial issues in the U.S. On Jan. 21, its SWIFT transfer partner, Signature Bank, announced that, as of Feb. 1, it would only accept trades from clients with U.S. dollar bank accounts over $100,000. The bank had previously declared that it was severely restricting deposits from cryptocurrency consumers.At the time, Binance stated that it was looking for a new <a href="https://www.coingabbar.com/en/crypto-currency-news/binance-banking-partner-swift-block-usd-payments-dollar-100k" rel="noopener noreferrer nofollow">SWIFT</a> partner and that all SWIFT trades involving other currencies, as well as trading in U.S. dollars using credit or debit cards, would continue to be accepted.Signature Bank&#39;s most recent action comes after it disclosed plans to sell up to $10 billion in crypto deposits in December in an effort to reduce its exposure to the turbulent market changes. Joe DePaolo, the bank&#39;s CEO, stated that they are not a cryptocurrency bank and that they do not want to be obligated to any particular sector or client.A Binance spokesperson informed in reports, that they are temporarily suspending USD bank transfers while they upgrade their services. They have reached out to affected users and expressed their regret for any inconvenience this may cause.“Additionally, they are actively searching for an alternative solution for SWIFT bank transfers. As a result, all USD bank transfers have been paused while they work to improve the service. It is estimated that only 0.01% of their average monthly users utilize U.S. bank transfers.”Nansen&#39;s data, mention in the report, reveals that significant movements of stablecoins have been made, including a $160 million withdrawal by crypto trading group Jump and a $230 million withdrawal by Oapital, a digital asset investment firm. This data indicates that the demand for stablecoins is on the rise, as investors seek to capitalize on the stability and security of these digital assets.<img src="https://academy-public.coinmarketcap.com/optimized-uploads/aa631dd4527845abafd6969e5a7c10d5.png" />Andrew Thurman, the Head of Content at Nansen, told in reports, “Jump and Oapital are major players who often move large sums of money, however, it is difficult to definitively attribute the movements to the banking announcement. I would say that the seven-day outflows might be a bit high, but the 24-hour inflows indicate that it is nowhere near panic levels.”<h3 id="cryptocurrencies-are-volatile-so-banks-are-staying-cautious">Cryptocurrencies Are Volatile, So Banks Are Staying Cautious</h3>The increasing volatility of the cryptocurrency market makes it difficult for banks to invest.Banks are typically hesitant to engage with digital assets due to the lack of uniform regulations governing the nascent market. In many countries within the European Union, this has resulted in a total ban on a national regulatory level until the Markets in Crypto-Assets package, a pan-European regulatory set for digital assets, is implemented.For banks, the most important thing is to remain compliant with the financial system, and if they feel that they could be cut off due to taking on too much risk, they will simply avoid it altogether. This is why banks are so cautious when it comes to dealing with digital assets, as they want to ensure that they remain in good standing with the financial system.Tony Petrov, Chief Legal Officer at compliance-as-a-service provider Sumsub, told in reports that the ongoing bear market is another reason behind the banks&#39; recent action. He stated, &#34;When the crypto market was skyrocketing, some banks were lured into the open arms of crypto exchanges. They had no bad reputation, their open faces inspired confidence, and the concern that most of the banks had little or no understanding of the crypto industry could not compete with the unprecedented figures of profits that one could make in crypto.&#34; He continued,&#34;But the time to scatter stones may be replaced by the time to gather them. Now, some banks that were actively involved in crypto may be reevaluating their involvement and changing their policies.&#34;Lars Seier Christensen, the founder of Saxo Bank, has noted that the recent events surrounding <a href="https://www.coingabbar.com/en/crypto-blogs-details/dollar-billion-worth-of-solana-to-be-dumped-amid-ftx-collapse-coingabbar" rel="noopener noreferrer nofollow">FTX</a> and other crypto-related disasters, coupled with the current low market volumes, have caused a significant decrease in confidence in the crypto industry. Banks have concluded that the advantages of crypto trading activities are not worth the increasing regulatory and business risks.He added that crypto businesses must take steps to restore their reputation, and for that, they will need to implement a more stringent compliance infrastructure. Ideally, third-party entities should guarantee the necessary levels of risk management to bridge the gap between crypto exchanges and banks, and to restore mutual trust between both sides of the global financial system.Clearly, the more difficult the access, the fewer new clients and deposits will find their way onto exchanges, exacerbating the problems they are already having with low volume. Talking about how crypto exchanges can mitigate this hurdle, he explained:“A number of credit card companies still support payments to companies that banks often place restrictions on, such as gambling, adult sites, and others. However, the best way for the industry to move forward is to embrace and welcome clear regulations and adhere strictly to them, while also contributing their expertise to help shape them.”Eddie Hui, Chief Operating Officer at the crypto exchange platform MetaComp, recently mentioned in reports the increasing trend of bank runs on exchanges, where clients attempt to withdraw their funds simultaneously. Hui believes that reducing exposure to crypto and diversifying the client base could help to mitigate such risks.He noted that Silvergate&#39;s restriction was on transactions below $100,000 and that some exchanges may opt to bundle withdrawals and use a third-party payment company, though this could introduce additional costs, delays, operational burden, and counterparty risk.Hui further commented that the end client will ultimately bear the brunt of these changes, lamenting the widening gap between crypto and banks. His remarks come in the wake of the recent action of Binance&#39;s USD banking partner, which has caused a stir in the crypto community.After a tumultuous 2022 that saw many crypto giants fall from grace, regulatory bodies have declared that crypto will be their priority, and experts are calling for uniform regulations to restore trust in the ecosystem. Until then, exchanges will have to find ways to navigate the hurdles and risks on their own.Also Read - <a href="https://www.coingabbar.com/en/crypto-currency-news/stablecoins-are-not-securities-we-are-open-for-a-dialogue-with-regulators-coinbase" rel="noopener noreferrer nofollow">Stablecoins Are not Securities, We Are Open For a Dialogue with Regulators: Coinbase</a>

Crypto Vs. Banks: Binance Suspends Bank Transfers in U.S. Dollars

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