The crypto markets have shown strong signs of recovery, but not everyone is convinced, and financial institutions are understandably on their guard.
According to the Federal Deposit Insurance Corporation (FDIC), offering cryptographic products and services should be considered a high risk activity by traditional banks.
“Business models that are concentrated in crypto-asset-related activities or that have concentrated exposures to the crypto-asset sector raise significant security and robustness concerns. (We) will continue to closely monitor the crypto asset-related exposures of banking organizations. […] The agencies will issue additional statements related to the participation of banking organizations in activities related to crypto assets.”
Binance breaks the news
Some banks have apparently heeded the recent warning, with immediate consequences for customers. Yesterday, Binance addressed its user base, informing them that one of its partners, Signature Bank, will stop handling fiat-to-crypto transactions worth less than $100k, according to to Bloomberg.
The new policy will take effect on February 1 when the bank tries to limit its exposure to cryptocurrencies. Signature Bank, an institution that provides financial services aimed at small businesses and executive-level private clients, suffered a 64% drop in share price last year.
Aiming to reduce the size by billions
Signature Bank also provided services to the elephant in the room, FTX. To address the crypto industry contraction caused by said elephant, Signature Bank reportedly wants to get rid of up to $10 billion in deposits belonging to companies and investors heavily involved with cryptocurrency.
As a result, some Binance users may be temporarily unable to buy or trade cryptocurrencies with fiat. Naturally, this does not affect crypto-to-crypto exchanges or the ability of users to transfer their assets to another platform and get paid there.
Binance emphasized that Signature Bank’s policy change will only affect approximately 0.01% of its user base and that the team is actively seeking a solution for those who would find themselves without a fiat withdrawal option within a week.
It is unfortunate that some banks feel the need to distance themselves from cryptocurrencies due to fears that another industry giant will collapse overnight. However, this incident should also serve as a reminder to stablecoins that financial organizations no longer view cryptocurrencies as a gold rush instant opportunity and, as a result, a constant dialogue with these entities is necessary so that your decisions are not affected by FUD. .
Binance Free $100 (Exclusive) – Use this link to sign up to receive $100 free and 10% off your first month’s fees for Binance Futures (terms).
PrimeXBT Special Offer – Use this link to sign up and enter the code POTATO50 to receive up to $7,000 on your deposits.