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Signature Bank sets minimum transaction size of $100,000 for Binance deals

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Cryptocurrency exchange Binance confirmed over the weekend that Signature Bank will require transactions of a minimum of USD 100,000 to trade on Binance from next month. The fiat banking partner for Binance will initiate the transaction limit from 1 February. Binance has communicated the news to Signature Bank customers who currently use the exchange.

At time of writing there was no further news that other fiat partners may be implementing similar measures. It impacts the use of the SWIFT banking network through Signature.

Signature Bank is a New York-based full service commercial bank, operating across four states. At the end of 2021 it held assets of more than $118bn as well as deposits of $85bn. The bank had previously been regarded as ‘crypto friendly’ – in September digital assets accounted for nearly 25% of total deposits, making it a major onshore US nexus for the cryptocurrency industry. Indeed, failed cryptocurrency exchange FTX was a client of Signature.

Following the collapse of FTX, Signature Bank seems be making efforts to put some distance between itself and the crypto world. CEO Joe DePaolo has previously said the bank should be viewed as more than just a crypto bank, and obviously has ambitions to grow its full service banking offering domestically. The bank seems to have taken a hit with the FTX collapse and indeed the stock has been sold off quite dramatically. Shares have tanked from just over $200 in August to trade at less than $130 today.

Signature Bank and Binance: what’s going on?

  • Signature has its own digital payments platform called Signet
  • A number of other major names in digital assets use Signature, including Coinbase and Circle
  • CEO John DePaolo told analysts on Signature’s latest earnings call that the bank is lowering its “concentrations” on Signet
  • Binance apparently passed Signature Bank’s due diligence requirements in order to be accepted as a Signet client
  • US banking regulators have just warned local banks against expanding their exposure to crypto

The move comes with Binance under increased scrutiny from US regulators. One of the bigger issues seems to be the use of Binance by hackers, especially those responsible for ransomware attacks, to collect ransom money. This is according to sworn deposition by FBI agent Daniel Sirmons. He said that hackers will typically merge payments using Binance accounts.

Because Binance is domiciled in the Cayman Islands, and its CEO travels constantly, law enforcement authorities find it harder to make Binance comply with legal processes. Former SEC director of enforcement John Reed Stark has said US state and federal regulators should be focusing more on Signature Bank instead, and reviewing risk issues.

Signature is not the first bank to impose fiat restrictions on Binance: HSBC once stopped fiat transfer to Binance, but many traders got around this by sending cash to Coinbase and then buying USDT. This could then be sent on to Binance on-chain.

Binance is coming under a lot of pressure as US regulatory authorities and law enforcement monitor the way it is being used by bad actors, including hackers and traders getting around US sanctions on Iran. The very nature of crypto makes it harder to police through conventional banking networks.

One possible area of vulnerability is the connectivity between big platforms like Binance and tradfi markets, including the USD market, which still requires banks (many of which have operations in the US and links to US custody banks). We anticipate further action in this area in 2023.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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