What's Happening?
Cryptocurrency exchange Binance.US has made changes to its terms of service, indicating that direct withdrawals in United States dollars are no longer supported on the platform. The update, made on October 16, modifies the section about the "BAM Fiat Wallet," which refers to Binance.US services related to U.S. dollar custody.
Converting to Stablecoins or Digital Assets
According to the updated terms of service, Binance.US users now have the option to "convert" their U.S. dollar holdings to stablecoins or other digital assets in order to withdraw funds from their accounts. The change has been confirmed by cryptocurrency enthusiasts on social media platform X (formerly Twitter).
No Insurance Protection for Digital Assets
Binance.US has reiterated that digital assets are not eligible for insurance protection by the Federal Deposit Insurance Corporation (FDIC). In a previous update on May 5, 2023, Binance.US stated that in the event of terminating its relationship with a USD custodian, it would provide notice and time for users to withdraw their U.S. dollar deposits. Any deposits not withdrawn by the deadline would then be converted to stablecoin digital assets and transferred to users' digital assets accounts.
Changes from Previous Terms of Service
The latest updates to Binance.US' terms of service differ from a version posted in May 2023. The previous version included information that BAM, Binance.US' operator, is not a member of FDIC and is not a bank. However, it stated that USD custodians were used to hold U.S. dollar deposits in omnibus accounts at FDIC-insured banks, with the intention of being eligible for FDIC insurance coverage up to $250,000 per individual.
Binance.US Facing Fiat On-Ramp and Off-Ramp Challenges
This recent change is another example of Binance.US struggling to maintain its fiat on-ramps and off-ramps. The exchange has previously halted some U.S. dollar operations, including suspending U.S. dollar deposits in June 2023. While the firm claimed to have resolved the withdrawal issues, it warned that the solution could be temporary.
