Binance may be feeling the sting of the bank’s new crypto limit

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Banks servicing the crypto space have been prominent casualties amid Bitcoin’s decline. The time of dreams

Signature Bank is putting even more distance between itself and digital assets and its decision could affect the world’s largest cryptocurrency exchange, Binance.

Signature Bank (ticker: SBNY), an FDIC-insured institution that was early in the crypto game, will not support individual crypto clients who buy or sell amounts below $100,000, Binance told Barrons on Monday.

This is the case for all of their crypto exchange clients, a Binance spokesperson said.

The policy, which will come into effect in February, will not allow customers to use the international banking network known as SWIFT, the Society for Worldwide Interbank Financial Telecommunication. Signature Bank was one of Binances US SWIFT partners.

The signature movement affects 0.01% of Binances’ average monthly users and will not affect exchange functions, including buying and selling crypto with a credit card or other fiat currency such as Bitcoin. euro.

We are actively working to find an alternative solution, the spokesperson said.

The signatures decision, reported this weekend by Bloomberg News, should come as no surprise.

The bank pulled out of digital assets in December after a turbulent year and aimed to reduce crypto-related deposits. Limiting the use of SWIFT for clients trading crypto on Binance is a logical next step for a bank limiting its reputational and financial exposure to a volatile asset.

Analysts had mixed reactions to Signatures’ decline in December: the reduction in crypto deposits to less than 15% of total deposits. Analysts noted that moving away from some $10 billion would lead to funding pressures.

Signatures’ fourth quarter results showed that digital asset customer deposits in 2022 fell $12.4 billion, with total deposits of $88.6 billion. Bank stock prices have fallen nearly 60% in the past year.

Silvergate Capital (SI), another regulated way to play the crypto boom, suffered even more. Silvergate has seen its share price collapse by 85% in 12 months.

So far, however, Signature and Silvergate have mostly hurt themselves and investors. Now, the change in signatures is proving to have wider implications for crypto, and big banks shunning digital assets are another reason to be nervous about Bitcoin.

Write to Jack Denton at [email protected]

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