Binance.US, the American arm of the global cryptocurrency exchange, has introduced changes to its terms of service, suggesting that direct withdrawals in United States dollars may no longer be supported on the platform. The updated terms of service, which were implemented on October 16, bring notable alterations to the section regarding the “BAM Fiat Wallet,” referring to Binance.US services related to the custody of U.S. dollars.
In this updated version, Binance.US stipulates that users “may convert” their U.S. dollar holdings into stablecoins or other digital assets to facilitate withdrawals from their accounts. While this change hasn’t been universally embraced by the cryptocurrency community, it indicates a shift in the withdrawal options available to users.
Crucially, these terms stress that digital assets are not eligible for insurance protection by the Federal Deposit Insurance Corporation (FDIC). This means that users should be aware of the potential risks associated with the conversion of their U.S. dollar holdings into digital assets, as they would not enjoy the same insurance coverage as traditional bank deposits.
The latest terms of service updates notably differ from those posted in May 2023. Previously, Binance.US indicated that BAM, the operator of Binance.US, is not a member of FDIC and is not a bank but had worked with USD custodians to ensure that U.S. dollar deposits were held in omnibus accounts at FDIC-insured banks. This arrangement aimed to make the funds eligible for FDIC insurance coverage, up to a limit of $250,000 per eligible individual, in the event of a bank failure. However, the recent changes indicate a shift away from this setup.
This development serves as another example of Binance.US facing challenges in maintaining its fiat on-ramps and off-ramps, as the exchange has encountered issues with U.S. dollar operations over the past year. In June 2023, Binance.US suspended U.S. dollar deposits and warned customers about a potential pause in fiat withdrawal channels. While the exchange reported a resolution to U.S. dollar withdrawal issues at the time, the latest changes suggest that the situation remains fluid and may continue to evolve.
As Binance.US navigates the evolving regulatory landscape in the United States, these changes reflect the need for flexibility in providing fiat-related services to its users. Users should closely monitor any updates from the exchange and be aware of how they may impact their ability to deposit and withdraw funds in the future.
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