Binance is suspending USD deposits and withdrawals for international users

Binance, the world’s leading cryptocurrency, announced recently that it will suspend USD deposits and withdrawals, without really offering a reason for the decision. The company revealed its plans yesterday, February 6th, only stating that all USD bank transfers will stop on February 8th.

The company did say that it is a “temporary suspension,” although it did not share how long it will last, or what circumstances led to this decision. However, according to a person familiar with the matter, the suspension will likely last several weeks, “until a new banking partner is established.” This last part indicates that Binance stopped its collaboration with the banking entities that allowed it to work with USD — something that the exchange did not confirm or deny.

[DB] Binance to Suspend USD Bank Transfers Feb 8th: Spokesperson

Suspension Expected to Last ‘A Couple Weeks’ Until New Banking Partner Is Established: Person Familiar

— db (@tier10k) February 6, 2023

It said that it is updating customers about the decision directly, adding that around 0.01% of its monthly active users leverage USD bank transfers, which is why the exchange will work on restarting the service as soon as possible.

Fortunately for the US customers, the local branch of Binance — Binance US — will not be affected by the decision. This unit of the company is regulated by the US Treasury Department’s Financial Crimes Enforcement Network. Binance US confirmed in a tweet that US users would be able to continue using USD with no interruptions, so the move technically only applies to non-Americans who were using USD to transfer money in and out of the exchange.

https://t.co/gM6e3xb9BX is not affected by this suspension. Unless you see an official message from https://t.co/gM6e3xb9BX, our customers will not be affected.

— Binance.US Customer Support (@BinanceUShelp) February 6, 2023

While the exchange insists that only 0.01% of users rely on the US dollar to transfer their money, Arkham Intelligence data suggests that the announcement was followed by a major spike in outflows from the exchange’s crypto wallet. Millions of dollars in USD-pegged stablecoins like USDC and USDT have left the exchange, moved either to personal wallets or onto different crypto exchange platforms.

Binance remains unaffected by the outflows

During this first day following the announcement, Binance saw a US dollar outflow of over $172 million. However, this is only a small amount of the exchange’s $42.2 billion in crypto assets, according to Arkham data. Binance itself confirmed that it is still overwhelmingly net-positive on net deposits. Its spokesperson added that “Outflows always tick up when prices start to level off following a bullish market swing like we saw last week as some users take profits.”

The bullish swing in question has allowed Bitcoin to surge by 38% since the start of the year, making January 2023 Bitcoin’s best month since October 2021, which was right before the start of the crypto winter.

As for Binance’s own native cryptocurrency, the BNB  it was mostly unaffected by the move. Its price remains stable at $328.70. If anything, the coin’s price went up by 1.11% in the last 24h, and it remains up by 5.92% on a weekly basis.

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