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Binance.US has officially ceased allowing users to withdraw U.S. dollars directly from their accounts. This decision came to light when the platform updated its terms of use. Now, if users wish to withdraw U.S. dollar funds, they must first convert these funds to stablecoin or other digital assets, which can then be withdrawn.
The updated terms of use state, “Digital Assets are not legal tender, are not backed by any government, and accounts and value balances are not subject to protections or insurance provided by the FDIC or the Securities Investor Protection Corporation (SIPC).”
The loss of FDIC insurance isn’t the only challenge Binance.US is facing. The exchange has been under the regulatory microscope, particularly from the U.S. Securities and Exchange Commission. The SEC has raised concerns about Binance.US’s compliance with specific regulations, leading to increased scrutiny.
The SEC’s Stance and Binance.US
The decision to halt direct USD withdrawals wasn’t made in isolation. In June, Binance.US had already suspended dollar deposits. This move was attributed to the U.S. Securities and Exchange Commission’s (SEC) assertive approach towards the crypto industry, which reportedly made banking partners hesitant to collaborate with the sector.
Furthermore, the SEC initiated legal action against Binance.US, its international counterpart, Binance, and its founder, Changpeng “CZ” Zhao. The allegations revolved around operating unregistered securities platforms. The SEC’s inquiries also extended to the company’s custody practices and willingness to cooperate with legal requests.
Implications for FDIC Insurance
Another significant update in Binance.US’s terms of use is the status of FDIC insurance for U.S. dollar deposits. Previously, these funds enjoyed protection under the Federal Deposit Insurance Corporation (FDIC). However, with the recent changes, U.S. dollar funds in Binance.US wallets are no longer covered by this insurance.