Binance will temporarily stop U.S. dollar deposits and withdrawals beginning on February 8.
The popular cryptocurrency exchange has stopped trading, but it has not said why. Instead, it has said that it is looking for a solution. A tweet from the company said, “This will only affect a small number of our users, and we are working hard to get the service back up and running as soon as possible.” It also said, “All other ways to buy and sell crypto are still the same.”
Binance.US is a separate organization that says it will not be affected. American customers shouldn’t be affected because they can’t use the international platform. Binance wrote on Twitter, “We are NOT stopping $USD withdrawals and deposits on February 8.” Customer service in the US.
The stoppage of U.S. dollar transfers by Binance
If you use Binance, any news story that says withdrawals will be stopped is probably scary. After FTX and other crypto platforms went down recently, the crypto community is still on edge. Millions of dollars from FTX customers have been lost or are caught up in the legal mess.
Binance’s CEO is Changpeng Zhao, also referred to as CZ. In an effort to reassure customers, he claimed that only 0.01% of the company’s monthly active users make bank transfers in US dollars. However, it would be preferable if the business gave a justification for the adjustment. Even limited withdrawals in one currency are a warning indicator that clients can’t access their money.
It’s not the first time that Binance has stopped deposits and withdrawals for certain currencies. Due to problems with the UK’s Financial Conduct Authority, it had to stop British pound withdrawals and deposits in the summer of 2021. (FCA). Even though it did get back up and running in the end, British crypto investors were scared by what happened.
Since then, Binance has tried to stay on good terms with regulators by growing its compliance team and stepping up its efforts to stop money laundering and other crimes. Reuters, on the other hand, said that in December 2022, U.S. authorities were thinking about charging the exchange with money laundering. Binance said that the Reuters report was “hugely out of date” and “wrong,” and it told Fortune that user safety is its top priority.
How to keep your cryptocurrency safe
The good news is that Binance told its customers ahead of time that it would stop letting them withdraw U.S. dollars, so they had time to prepare. It also says that deposits and withdrawals in other currencies won’t be affected. Another reason why the effect is likely to be small is that American customers can only use the Binance.US platform, which is where most U.S. transactions happen.
But it’s still important to be careful. Even more so because we don’t know why Binance is limiting the use of U.S. dollars, Bloomberg says it could be because of a problem with a certain bank partner, but it could also be because of something bigger.
To be clear, it’s unlikely that this is the start of something worse, and it’s also unlikely that it will hurt Binance.
US customers will come later. Unfortunately, it’s hard to know for sure because very few people trust centralized crypto exchanges. Before FTX went out of business, the company told its customers that their money was safe.
As a crypto investor, the only sure way to protect your assets is to move them to a crypto wallet you control. These wallets are called “non-custodial wallets,” and you’ll need a bit more crypto knowledge to set one up and feel comfortable moving your assets. You will also be in charge of keeping it safe, so don’t forget your security phrase. There are billions of dollars worth of Bitcoin (BTC) that people can’t get to because they forgot the password to their crypto wallets.
It’s easy to see why you might want to leave your cryptocurrency in a custodial wallet on the platform where you bought it, and it does have some benefits. First of all, it’s much easier to use a crypto exchange. It’s easy to understand the fees. And if you forget your password, you won’t have to work too hard to get it back. Lastly, many exchanges make it easy to put your crypto on the line and get rewards.
The biggest problem is that there isn’t much protection for investors. Unlike banks, crypto assets on exchanges aren’t covered by FDIC insurance in case the exchange goes bankrupt. This means that your money could be lost in bankruptcy. This is the main reason to learn about wallets that don’t keep your money. If your exchange goes down, gets hacked, or has to stop withdrawals for some other reason, your crypto won’t be affected if it’s in an external crypto wallet.
Bottom line
The fact that Binance plans to stop U.S. dollar withdrawals is almost certainly a short-term problem. But it’s not strange that people who invest in cryptocurrencies are worried. If you keep your assets in a custodial wallet on Binance or another crypto exchange, they could be at risk if the platform goes down or stuck if the exchange stops withdrawals.
Since one of the best things about crypto is that you don’t have to depend on centralized platforms, you might want to look into other ways to store your crypto.
