Binance US asks users to convert USD into stablecoins for withdrawals
Cryptocurrency exchange Binance.US has updated its terms of service, hinting that direct withdrawals in the U.S. dollar are no longer supported on the platform.
Binance.US updated its terms of service on Oct. 16, significantly modifying the section about the “BAM Fiat Wallet,” referring to Binance US services related to USD custody.
In the updated terms, Binance.US wrote that users “may convert” their USD funds to stablecoins or other digital assets in order to withdraw USD funds from their accounts.
Some cryptocurrency enthusiasts took to X (formerly Twitter) to confirm the terms of service’s change on Binance.US. “Binance seizes USD. Don’t worry you can buy Tethers printed out of thin air or shitcoins,” one crypto observer on X wrote.
Binance US seizes USD.
Don’t worry you can buy Tethers printed out of thin air or shitcoins. pic.twitter.com/BPh7SY3qTM
— Bitfinex’ed Κασσάνδρα (@Bitfinexed) October 17, 2023
Similarly to previous terms of service’s updates, Binance.US stressed that digital assets are not eligible for insurance protections by the Federal Deposit Insurance Corporation (FDIC).
“In the event we terminate our relationship with a USD custodian and we are unable to find another USD custodian, we will provide notice and time to withdraw your U.S. dollar deposits,” Binance.US wrote in an update on May 5, 2023. The firm added:
“Any U.S. dollar deposits that are not withdrawn by the deadline provided in the notice will be converted to stablecoin digital assets and transferred to your digital assets account.”
The latest updates of Binance.US’ terms of service notably differ from a version posted in May 2023. At the time, the page included now-removed information that BAM — Binance.US operator — is not a member of FDIC and is not a bank, but has “worked with the USD custodians” to ensure U.S. dollar deposits are held by USD custodians in omnibus accounts at FDIC-insured banks.
Subject to BAM‘s and the USD custodian‘s compliance, it’s BAM’s intention that the funds be eligible for FDIC insurance coverage limit at $250,000 per eligible individual, “which would only be applicable if a bank were to fail,” the terms of use from May 2023 read, adding:
“In the event the bank does fail […]it is possible that your account(s) with the bank and the fiat […] will be aggregated for purposes of determining your eligibility for FDIC deposit insurance. FDIC insurance does not protect against the failure of BAM or malfeasance by any BAM employee.”
Binance.US did not immediately respond to Cointelegraph’s request for comment.
Related: Binance.US taps MoonPay as banking alternative to regain USD ramps
The news brings yet another example of Binance.US struggling to maintain its fiat on ramps and off ramps as the exchange has halted some USD operations over the past year.
In June 2023, Binance.US suspended USD deposits and notified its customers of an incoming pause to fiat withdrawal channels. The firm subsequently said it resolved USD withdrawal issues but warned that it could be a temporary solution.
Magazine: The Truth Behind Cuba’s Bitcoin Revolution: An on-the-ground report