Signature Bank will raise their minimum for crypto transfers to $100,000. This will go into effect as of February 1, 2023. The bank is one of many bank partners of Binance.
So, let’s see what impact this action by Signature Bank will have on SWIFT transactions for retail users.
BREAKING: 🇺🇸 Signature Bank restricts accounts of Bitstamp, Bithumb, Binance, eToro, Huobi, Kraken (Payward), Nexo, OKX 😱 pic.twitter.com/6blnj3PAWL
— Bitcoin News ⚡ (@BitcoinNewsCom) January 23, 2023
How Many Crypto Exchanges Does This Affect?
Signature Bank is a partner of many crypto exchanges. For instance, Kraken, Huobi, Binance, OKX, and eToro. All users of these crypto exchanges need to transfer at least $100,000 to use Signature Bank’s service. In other words, retail users of Signature Bank will not be able to use SWIFT any longer.
Bloomberg brought this news first. However, Binance came with a statement soon after. Note that Binance hasn’t made an announcement yet on their website or social media about this. They mentioned that this only affects 0.01% of their users. In other words, only 0.01% of their users use Signature Bank for their crypto transactions. Most importantly, this didn’t impact any other banking partners. Furthermore, Binance is now actively looking for a new banking partner.
The reason by this decision is that Signature Bank reduces its exposure to crypto. This is a direct result of the FTX collapse. The Federal Deposit Insurance Corporation (FDIC) also played a role. They are a bank regulator on the U.S. federal level. They cover the states that didn’t join the Federal Reserve System.
In a nutshell, banks have insurance for certain fiat issues, but not when crypto causes a problem. FTX is a prime example. Signature Bank shares (NASDAQ:SBNY) fell by 64% last year. Part of this may be because users withdrew their crypto shares after the FTX collapse. Below is a picture of the Binance message.
How Does This Impact SWIFT?
Any crypto exchange users of Signature Bank can no longer use SWIFT transfers. Unless they transfer at least $100,000. This is a one-sided decision made by Signature Bank, not by the crypto exchanges. In other words, retail users of Signature Bank get the short end of this stick. As of February 1st, they are no longer capable of using SWIFT for small transactions.
SWIFT is an extensive messaging service used by financial institutions. It’s used by institutions from all over the globe. It allows for sending and receiving encrypted information. For example, cross-border transactions.
However, the number of impacted users may be small. According to Binance, only 0.01% of their users. Nonetheless, it’s still an inconvenient situation to be in. Binance did point out that you can still use your credit or debit cards. With these, you can still sell and buy cryptocurrencies.
Signature Bank is reducing its exposure to crypto. One of the steps they made is raising the minimum amount for SWIFT transfers to $100,000. This has a big effect on the bank’s retail users that like to transfer cryptocurrencies. On the other hand, Binance pointed out this affects only 0.01% of their users.
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