The collapse of Signature Bank has caused one former client, crypto exchange Binance, to search for another banking partner as it attempts to find a place to store its customers’ funds, The Wall Street Journal reported.
As the exchange formerly sent its depositors’ cash to either Signature Bank or Silvergate Capital Corp., which has also collapsed, it is now using at least one middleman to store funds on its behalf—which can slow down the process of sending and moving funds, according to the Journal’s sources.
The Journal's sources also cited concern over regulatory risk as one reason that some banks were reluctant to do business with Binance.US. Crypto firms still rely on banks to connect with a financial system that runs on hard currencies.
For now, Binance.US has been storing customer cash via a crypto-services and financial technology firm, Prime Trust LLC, the sources said.
Last month, the Commodity Futures Trading Commission (CFTC) sued the exchange’s larger worldwide affiliate, Binance Holdings Ltd., charging it with “numerous violations of the Commodity Exchange Act (CEA) and CFTC regulations,” such as evading federal law and operating an illegal digital derivatives exchange. The Securities and Exchange Commission (SEC) and the Justice Department have been investigating the the relationship of Binance, which lists no U.S. headquarters, to Binance.US at least since 2020.
The lack of a direct bank has prompted Binance.US to tell its customers that it would be “transitioning to new banking and payment service providers over the next several weeks,” the Journal reported. Some dollar services, including wire deposits and withdrawals and Apple Pay and Google Pay deposits would be temporarily unavailable, the update said.
Some banks have taken on crypto clients after the Silvergate and Signature collapses, but other bankers told the Journal that they are being selective about which clients they choose to take on, and some have pulled back from the crypto business due to the increased scrutiny from federal bank regulators,