Binance Transforms Cash Reserves Into Digital Currencies By Investing.com

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By Geoffrey Smith 

Investing.com — Binance, the world’s largest cryptocurrency exchange, declared that it would convert nearly $1 billion of its funds into assorted digital assets. This news, however, did not alleviate fears of the increasing American oversight of their operations.

“Given the recent changes in stable coins and banks, #Binance will convert the remainder of the $1 billion Industry Recovery Initiative funds from BUSD to native crypto, including #BTC, #BNB and ETH,” Binance CEO and founder Changpeng Zhao said.

This money was set aside to help struggling yet viable crypto businesses which were hit by the downfall of FTX in November. Since then, there have been no major support deals.

The announcement comes after a chaotic week for cryptocurrency. They were rocked by the failures of three of their largest institutions, which enabled transitions of money between fiat and digital currencies. These were Silicon Valley Bank, Signature Bank (NASDAQ/SBNY) Silvergate Capital (NYSE:SI).

Crypto circles have been significantly worried about the probability of a collapse, which led to a decrease in their mobility to trade and panicked selling of tokens that were at risk. USD Coin dropped to a low of 88c on the weekend after it was widely reported that it had $3.3B in reserves. Nonetheless, it bounced back and is now the world’s most popular stablecoin.

The shift comes after the Federal Reserve expressed Sunday that it would honor all deposits, and not just federally insured ones, after it took the bank over Friday. Prices of Bitcoin, Ethereum, and BNB, a Binance native token, all increased in response to Binance’s news, alongside relief that a disaster had been averted.

However, some were quick to draw comparisons between Binance’s move and one by Do Kwon, the creator of the ill-fated Terra/Luna Network of stablecoins, who transferred its cash reserves to Bitcoin before it crashed last May.

Recent U.S. regulatory actions, as well as unfavorable disclosures regarding its operations have made it more difficult for Binance to operate in the U.S. Regulatory spotlight has been on them since the failure of FTX, leaving U.S. customers of crypto exchanges exposed to the governance risks of offshore unregulated entities. Internal documents from Binance, obtained by Reuters in February, indicated that the offshore parent was able to exercise effective control over the U.S. operations – something that Changpeng Zhao has been repeatedly denying.


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“Given Signature/Silvergate failures, any bank doing any crypto-related work poses a systemic threat and faces a 24-7 U.S. regulatory colonoscopy,” John Reed Stark, a former head of enforcement for the Securities Exchanges Commission tweeted. “If there is no way to cash-in casino chips after gambling, people will stop going to casinos.”

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