Binance.US, the American arm of the world’s largest cryptocurrency exchange, has announced the suspension of U.S. dollar deposits and the imminent pause of fiat dollar withdrawal channels. This development comes just days after Binance and its CEO, Changpeng Zhao, were sued by U.S. regulators. In a tweet, Binance.US stated that it is taking proactive measures to transition to a crypto-only exchange temporarily. While trading, staking, and deposits and withdrawals in cryptocurrencies will remain operational, the halt on fiat transactions has raised concerns among customers.
SEC’s Legal Action
The U.S. Securities and Exchange Commission (SEC) initiated legal action against Binance and Zhao on Monday, followed by a lawsuit against Coinbase, the largest U.S. cryptocurrency platform, the following day. These events mark a significant escalation in the regulatory crackdown on the cryptocurrency industry, following the FTX collapse last year.
According to a publicly available SEC filing, U.S. financial regulators expressed support for freezing Binance’s assets. Matthew Dibb, the COO of Singapore crypto platform Stack Funds, commented that the suspension of withdrawals will likely cause worry and panic among users, given Binance.US’s smaller scale compared to its international counterpart. However, industry observers note that the recent SEC comments and issues targeting Binance have made this outcome somewhat expected.
Cryptocurrency Prices Remain Unaffected
Despite the regulatory turmoil, the news had a limited impact on cryptocurrency prices. Bitcoin saw a marginal decrease to $26,496, heading for a weekly loss of approximately 2%. Binance’s native token, BNB, also experienced a slight decline, sliding 0.46% to $261.46. Market analysts suggest that the muted reaction may indicate that the market either shrugged off the news or has yet to fully comprehend its implications.
Regulatory Agency Facing Criticism
In response to the SEC’s actions, Binance.US criticized the regulatory agency’s aggressive and intimidating stance on cryptocurrencies. The exchange pledged to vigorously defend itself, its customers, and the industry against what it considers meritless attacks from the SEC. The crypto industry has recently targeted SEC chair Gary Gensler, although he has denied accusations that the agency aims to crush the cryptocurrency sector.
As regulatory scrutiny persists, experts predict that exchanges, stablecoin issuers, and industry participants will specialize in specific roles to collectively enhance the user experience. Wayne Huang, the Co-founder, and CEO of XREX Inc, a blockchain-enabled financial institution operating the XREX USD-crypto exchange, emphasized the need for industry players to adapt and navigate the evolving regulatory landscape.
