By Geoffrey Smith
Investing.com — Binance, the world’s largest crypto exchange by volume, announced that it will be diversifying its reserves by converting nearly $1 billion in funds into different digital currencies, a move which caused prices of those currencies to increase, though the decision did not ease worries of the increasing US oversight into its operations.
“Given the changes in stable coins and banks, #Binance will convert the remaining of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH,” declared Binance founder and CEO Changpeng Zhao.
Binance had designated the fund to support struggling yet viable crypto organisations that had been affected by the collapse of FTX in November. Despite this, the crypto firm – who pulled the plug on FTX and thus caused the crash – has not put into place any major support deals since the start of the year.
The announcement comes after a hectic week for the crypto market, which had been hit by the failure of three of the most prominent institutions that were responsible for transferring money between the two parallel worlds of crypto and fiat currency – Silicon Valley Bank, Signature Bank (NASDAQ:) and Silvergate Capital (NYSE:).
Their failure sparked panic in the crypto community and led to heightened selling of tokens considered to be at risk. , the second biggest stablecoin based on the outstanding volume, plunged as low as 88c over the weekend before recovering, following news that $3.3B of the reserves that was backing it were held in Silicon Valley Bank. Nevertheless, the market calmed down after the Federal Reserve assured on Sunday that it would honour all deposits – not just those backed by the federal insurance – after taking charge of the bank on Friday.
The prices of , and , a Binance native token, all rose as a result of Binance’s news which coincided with a general sense of relief that a major disaster was avoided.
However, while Zhao portrayed the move as a sign of faith in the crypto world and an indication of “transparency”, some individuals compared it to a decision made by Do Kwon, the founder of the failed stablecoin network. to transfer its cash reserves into Bitcoin shortly before its collapse last May.
Various steps taken by US authorities in the past few weeks, in addition to unfavorable revelations about its operations, have made it more difficult for Binance to operate in the US. The regulatory oversight has intensified significantly since the crash of FTX revealed how vulnerable US customers of crypto exchanges were to the governance risks of unregulated entities offshore. Reuters reported internal Binance documents in February that proved that Binance’s offshore parent had effective control over its US operrations – something that Zhao has repeatedly denied.
“Given Signature/Silvergate failures, any bank doing any crypto-related work poses a systemic threat and faces a 24-7 U.S. regulatory colonoscopy,” said John Reed Stark, a former head of enforcement at the Securities and Exchanges Commission via Twitter. “If there is no way to cash-in casino chips after gambling, people will stop going to casinos.”
