Binance.US is having a hard time parking cash in a bank following the collapse of Silvergate Bank and Silicon Valley Bank (SVB). According to a report by WSJ.com, Binance.US is working with a “middleman” to manage cash for dollar deposits – said to be Prime Trust, a firm that has a network of banking partners.
At the same time, it appears that some banks are not inclined to work with Binance.US – mentioned in the report as not agreeing to provide services are Cross River Bank and Customer Bancorp.
A Binance spokesperson provided a diplomatic comment on the challenge:
“We work with multiple U.S.-based banking and payment providers and continue to onboard new partners while upgrading our internal systems to create a more stable fiat platform and offer additional services.”
The anti-crypto rhetoric amongst various federal regulators has picked up in recent weeks following months of digital asset firms failing – topped off by the collapse of FTX.
At the end of March, the Commodity Futures Trading Commission (CFTC) filed charges against Binance, and founder and CEO Changpeng Zhao (known as CZ), as well as former Binance Chief Compliance Officer Samuel Lim with “numerous violations” of the Commodity Exchange Act (CEA) and other regulations. While Binance.US is a separate company from Binance – the drums are pounding louder as regulators tighten the vice on digital asset firms.
While the Securities and Exchange Commission (SEC) has encouraged crypto firms to come in and register – Coinbase claims these statements are not helpful as the SEC has not engaged in the process. The crypto exchange recently received a Wells Notice indicating an enforcement action may take place soon. Coinbase stated at the time the notice was revealed:
“Tell us the rules and we will follow them. Give us an actual path to register, and we will register the parts of our business that need registering.
While banks are not formally denied working with crypto firms, the Feds have made it clear that banks that choose to do so will garner more scrutiny – something banks probably would like to avoid.