Binance.US Relies on Intermediary to Store User Funds as Crypto Exchange Struggles to Find Banking Partner: Report

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The US arm of major crypto exchange Binance is reportedly looking for a new banking partner after Silvergate Capital and Signature Bank collapsed last month.

The Wall Street Journal reports that Binance.US is struggling to find a bank that will directly hold its customers’ money following the failure of Signature and Silvergate, which were the two banks most used by US crypto firms.

The exchange reportedly failed to establish direct banking relationships with New Jersey-based lender Cross River Bank, which hosts crypto and fintech firms, and Pennsylvania-based regional bank Customers Bancorp Inc.

People familiar with the matter reportedly say some banks are hesitant to do business with Binance.US in part because of regulatory risks, now that Binance and its CEO Changpeng Zhao face charges for allegedly violating Commodity compliance rules. Futures Trading Commission (CFTC).

To circumvent the situation, Binance.US would use at least an intermediary to store the funds of its customers. The exchange is reportedly backed by crypto services firm Prime Trust, which stores customer funds with its network of banking partners.

The sources say that the process of moving and sending funds might slow down due to customers holding cash in intermediary banks. Users are also experiencing disruptions in some services. Apple Pay and Google Pay deposits, for example, are temporarily unavailable.

Says the Binance.US website,

Due to recent developments in the banking industry, Binance.US is transitioning to new banking and payment service providers over the next few weeks. Some USD deposit services will be temporarily impacted during the transition.

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