Binance, the leading cryptocurrency exchange globally, has been informed by one of its banking partners, Signature Bank, that it will no longer process transactions that are below $100,000 as of February 1, 2023. This is likely to affect individual users who use SWIFT bank transfers to buy or sell digital currencies with/for USD in amounts less than the $100,000 limit.
The news has caused a ripple effect in the digital asset market and has impacted the shares of traditional banking institutions such as Silvergate Capital, which have gone down significantly. Signature Bank’s stocks have dropped by 40%, and its shares have decreased by 64% over the past year.
In the aftermath of this incident, Signature Bank announced that it will be reducing the deposits of digital assets up to $10 million in December. This has further heightened the fear of contagion in the crypto space.
The Federal Deposit Insurance Corporation (FDIC), a US Federal Regulator of State-Chartered Banks, has issued a warning in regards to the potential risks associated with digital assets. The FDIC said in a January 5 statement that banking organizations are allowed to offer banking services to customers of any type, but they should be aware of the dangers of concentrating on crypto-asset-related activities or having excessive exposure in the crypto-asset sector.
Binance has stated that it is working to come up with an alternative solution and that only 0.01% of its average monthly users are affected by Signature Bank’s announcement.