Binance Confirms Signature Bank Withdrawing Support for Crypto Transactions Below $100K
Binance crypto exchange confirms that Signature Bank is scaling down involvement in cryptos by denying support to transactions below $100,000. The crypto-friendly lender indicated that the fallout prevailing in the crypto made the institution vulnerable to unrecoverable loss. Also, the pro-crypto bank cited the volatility witnessed in the cryptos industry as exposing Signature Bank to declining yields.
Signature Caps Minimum Crypto Transaction
Binance statement indicated that Signature Bank was withdrawing support for transactions below $100000. The bank is citing the need to shield its operations from the volatility witnessed in the crypto industry. The update by the world-leading crypto exchange revealed Signature Bank’s directive warning Binance that it will halt support on February 1, 2023, for the crypto customers’ transaction amounts below $100,000.
The Signature Bank was implementing a blanket ban on all cryptos below the minimum $100K on February 1 2023. Binance’s statement warned users that customers transacting $100000 would no longer purchase and dispose of their cryptos via SWIFT for smaller amounts. Binance regretted the move by Signature Bank to ban transactions of small amounts as they accounted for 0.01% of the monthly users. The crypto exchange promised to explore alternative solutions for the affected users before the deadline lapses by February 1 2023.
Banks Scaling Down Involvement in Cryptos
Binance assured the crypto exchange users that they could utilize credit and debit cards to transact in their accounts via other fiat currencies. The statement lamented that SWIFT offered a quick and safe channel to execute money transfers since it leverages a global messaging network.
The apparent withdrawal in supporting crypto-related activities by Signature replicates decisions undertaken by financial services.
The firms allege the reduced involvement arises from the contagion meltdown witnessed in the digital assets following the calamitous FTX collapse. The decline has drowned Silvergate Capital, a reason Signature Bank is tactfully withdrawing mass involvement in small transactions.
Rethinking Crypto Deposits Following FTX Implosion
The Signature statement conveyed in December committed to reducing deposits tied to the cryptos by $8 billion. As such, its mulling capping the residual balances linked to digital assets to $10 billion. The report echoed earlier disclosures in September that the bank indicated that an estimated 23.5% of New York’s lenders’ deposits arose from the crypto sector.
In his address during the conference convened by investment bank Goldman Sachs, Signature chief executive DePaolo informed the New York audience that the volatility witnessed recently is compelling it to lower ties to the crypto deposits to 20% and, subsequently, 15%.
The lessons from the impact of FTX implosion trigger the Signature’s decision. Although the collapsed FTX deposits were estimated below 0.1% of Signature’s overall deposits, the relationship caused a 20% decline in the November shares price.
Editorial credit: PL Gould / Shutterstock.com
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