Silvergate Bank, a major financial institution partnered with crypto exchanges ranging from Kraken to Coinbase, recently cut ties with Binance.
Earlier this Wednesday, Binance sent an email to its users stating that the platform would no longer support deposits and withdrawals via Silvergate bank over SWIFT starting this Friday. As of now, Binance’s USD bank wire options remain discontinued.
“USD deposits made to our Silvergate Bank account after 11 June 2021 (UTC 23:59) will be returned to your account within 21 working days. The returned amount may be lower due to external bank fees involved,” the email read. “Rest assured, we are working hard to provide an alternative USD solution.”
Why Silvergate Bank May Have Cut Its Ties with Binance
While it remains unclear as to why Silvergate Bank abruptly ended its partnership with Binance, the bank’s recent partnership with Facebook’s stablecoin project Diem could be the reason.
The major cryptocurrency has been embroiled in controversy as of recently, facing a probe by the U.S. Department of Justice, Internal Revenue Service and Commodity Futures Trading Commission over money laundering and tax evasion.
As the exclusive issuer of Diem’s stablecoin, it’s possible that the California-based bank is looking to distance itself from being associated to Binance and its recent regulatory troubles.
Coincidentally, Diem recently relocated its major operations back to the United States — withdrawing its payment system license application from Switzerland. It’s important to note that Binance has been banned in the United States since 2019.
As Binance searches for an new US dollar provider, the exchange will continue to offer other bank transfers options in different fiat currencies — including but not limited to the Euro, Pound, and the Australian dollar, among others. Other payment methods such as debit, credit, and P2P methods are also available.
Interestingly, Binance.US — Binance’s American affiliate exchange — tweeted that it would continue to work with Silvergate as one of its banking partners.
As a legally separate entity, Binance.US is unlikely to face the same regulatory scrutiny as its parent company — which explains as to why Silvergate has chosen to continue working with the U.S. branch.