Cryptocurrency exchange Binance.US has sent shockwaves through the cryptocurrency community with its latest move. On Monday, the platform updated its terms of service, effectively putting an end to direct withdrawals in United States dollars (USD). The amendment primarily affects the "BAM Fiat Wallet" section, signaling a significant shift in how users can access their USD funds. This change has left cryptocurrency enthusiasts questioning the platform's commitment to fiat on-ramps and off-ramps, especially given Binance.US's earlier suspension of U.S. dollar operations earlier this year.
In related news, the leading cryptocurrency exchange platform has announced that it will cease accepting new customers from the UK. This move comes in direct response to newly introduced regulations designed to limit promotions from foreign digital asset firms operating within the UK. This decision reflects the broader global trend of increased scrutiny and regulation of the cryptocurrency industry, and it follows actions taken by the Financial Conduct Authority (FCA) to curtail promotions of cryptocurrency assets in the country.
Binance.US Updates Terms of Service, Ending Direct USD Withdrawals
Binance.US, one of the leading cryptocurrency exchanges in the United States, has made significant changes to its terms of service that have raised concerns among its users. The update, which took effect on 16 October 2023, has eliminated the option for direct withdrawals in United States dollars (USD) from the platform.
The modified terms of service primarily impact the "BAM Fiat Wallet," which refers to Binance.US services related to U.S. dollar custody. Under the revised terms, users are now required to convert their U.S. dollar holdings into stablecoins or other digital assets before they can withdraw funds from their accounts.
The news of this policy change quickly spread within the cryptocurrency community, with some users expressing their frustrations on social media platforms. On X (formerly Twitter), one cryptocurrency observer lamented, "Binance seizes USD. Don't worry; you can buy Tethers printed out of thin air or shitcoins."
This alteration in policy is not entirely unexpected, as Binance.US has consistently emphasized that digital assets held on the platform are not eligible for insurance protection from the Federal Deposit Insurance Corporation (FDIC). In a previous update on 5 May of this year, the exchange stated that if they were to terminate their relationship with a USD custodian and were unable to find a replacement, they would provide notice and time for users to withdraw their U.S. dollar deposits. Any unwithdrawn U.S. dollar deposits would be automatically converted to stablecoin digital assets and transferred to the user's digital assets account.
The recent terms of service updates mark a significant departure from the version posted in May 2023. The previous version had included information stating that Binance.US's operator, BAM, was not a member of the FDIC but had worked with USD custodians to ensure that U.S. dollar deposits were held by custodians in omnibus accounts at FDIC-insured banks. This gave users some assurance that their funds might be eligible for FDIC insurance coverage, up to $250,000 per eligible individual, in the event of a bank failure. However, the updated terms now remove any mention of potential FDIC coverage.
This move by Binance.US comes after a series of challenges related to its fiat on-ramps and off-ramps over the past year. In June 2023, the exchange temporarily suspended U.S. dollar deposits and warned its customers about possible disruptions in fiat withdrawal channels. Although they later claimed to have resolved U.S. dollar withdrawal issues, the latest policy change suggests that the exchange is still grappling with regulatory and operational hurdles in providing direct USD support.
As cryptocurrency regulation in the United States continues to evolve, Binance.US's decision to discontinue direct USD withdrawals reflects the ongoing challenges faced by exchanges in navigating the complex regulatory landscape while accommodating the demands of their user base. Users of the platform are now left with the task of adapting to the new withdrawal process, which involves converting their USD holdings into cryptocurrencies or stablecoins before making withdrawals.
Binance Ceases Accepting New Customers in the UK Amid Regulatory Crackdown
Meanwhile, the exchange platform has announced that it will no longer accept new customers from the United Kingdom. This decision comes as a response to new regulations that restrict promotions from foreign digital asset firms within the country.
The United Kingdom has taken a firm stance on cryptocurrency regulation, aligning with a global trend to oversee digital asset activities more closely. Concerns about the use and security of customer deposits in the largely unregulated cryptocurrency industry have heightened following several high-profile collapses within the space.
The Financial Conduct Authority (FCA) implemented its new rules pertaining to cryptocurrency asset promotions on 8 October of this year. These regulations mandate that unregistered cryptocurrency asset firms are prohibited from promoting cryptocurrency assets to UK consumers unless they are authorized by a registered company to do so.
Last week, the FCA made headlines by prohibiting the peer-to-peer platform rebuildingsociety.com from approving financial promotions for Binance and other cryptocurrency asset firms. This action followed shortly after Binance's announcement of a partnership with the platform.
In its official decision notice, the FCA underscored the requirement for cryptocurrency asset firms to collaborate with authorized entities for promoting their offerings to UK consumers. Binance, in response to these developments, expressed its commitment to compliance and cooperation with the regulatory body.
"We are working closely with the FCA and are actively seeking another suitable FCA-authorized firm to approve our financial promotions as soon as possible," Binance stated in its response.
The decision to stop accepting new customers from the UK reflects the cryptocurrency industry's evolving regulatory landscape. As governments worldwide continue to grapple with how to oversee and regulate digital assets, exchanges like Binance are adapting their operations to ensure compliance with local rules and regulations.
While existing UK-based Binance users will still be able to access their accounts and trade on the platform, the cessation of new registrations in the country underscores the challenges faced by cryptocurrency exchanges as they navigate a rapidly changing regulatory environment.
The price of Binance’s native token, Binance Coin (BNB) seems to have reacted negatively to the recent news. According to the cryptocurrency price tracking website CoinStats, the price of BNB dropped 0.33% over the past day of trading. As a result, the altcoin was changing hands at $212.48 at press time.
Despite the negative daily performance, the cryptocurrency’s price performance over the past 7 days remained in the green zone. CoinStats data indicated that BNB’s weekly performance stood at around +3.5%.
The longer-term time frames for BNB were not looking good. The altcoin’s price was down 2% for the month. This pushed the cryptocurrency’s performance deeper into the red zone as well - bringing it down to -23% as a result.
Price chart for BNB (Source: CoinStats)
In addition to weakening against the Dollar, BNB was also outperformed by the market leader Bitcoin (BTC) over the past 24 hours. At press time, BNB was down 1.54% against BTC. This meant that 1 BNB token was worth approximately 0.00745961 BTC.
The altcoin was also able to establish its peak for the previous trading session at $213.8. Since then, however, it has retraced slightly to its current value. Nevertheless, BNB was still trading closer to its 24-hour high than its daily low, which was recorded at $210.