On Monday, Binance announced that it was going to suspend deposits and withdrawals in US dollars, but it did not provide a reason for this decision.
A spokesperson for the largest crypto exchange in the world in terms of trading volume said that they would suspend bank transfers in US dollars temporarily from February 8th.
The spokesperson also asserted that they were notifying affected customers directly as about 0.01% of the exchange’s users rely on USD bank transfers.
They also added that the exchange was trying to restart the service as quickly as possible. A unit of the company, Binance US tweeted that the suspension did not have any impact on its operations.
The unit is under the regulation of the Financial Crimes Enforcement Network of the US Treasury Department.
This indicates that the move is only applicable to customers outside the United States who use US dollars for transferring money to and from bank accounts.
Arkham Intelligence published data showing that there had been a sharp increase in outflows from wallets on Binance after the announcement.
Users transferred millions of dollar-pegged stablecoins, such as USDC and Tether, to individual wallets and rival crypto exchanges.
Data from DefiLlama showed that the net US dollar outflow from the exchange for the day stood at $172 million.
Arkham said that this amount was a small one for a company that has crypto assets worth $42.2 billion. The spokesperson said that in terms of net deposits, they continue to remain net positive.
They added that outflows always increase when there is a leveling off in prices after a bull run because investors are usually taking profits, as had happened in the previous week.
There was an increase of over 38% in Bitcoin in January, which makes it the best month for the crypto since October 2021.
The news did not have much impact on the BNB token of the Binance exchange, as it continued to hold steady at a value of $328.
Binance said in late January that Signature bank, the company’s banking partner in the United States had increased the minimum transactions in US dollars to $100,000.
The company had said at the time that Signature had informed them that the new minimum limit was applicable to all customers of the crypto exchange.
As far as Monday’s suspension is concerned, a representative of Binance said that Binance.US does not have an issue because it has its own banking partners.
It should be noted that the main Binance crypto exchange does not facilitate users from the United States.
The crypto exchange also detailed that customers would still be able to use other payment methods or fiat currencies for buying crypto.
The spokesperson said that only a small number of users were affected by the suspension of US dollars transfers on the exchange and they would announce a new partner for these users in the next few weeks.