World’s largest cryptocurrency exchange, Binance, has announced a temporary suspension of US dollar deposits and withdrawals.
Binance has not officially stated the reason behind its decision, however, it has been confirmed that the service will be discontinued on February 8, 2023, and that each impacted customer will receive a personal notification. Despite only a minuscule 0.01% of Binance’s monthly users utilizing USD bank transfers, the company has expressed its eagerness to resume the service as soon as possible.
Binance US, which operates under the supervision of the Financial Crimes Enforcement Network of the Treasury Department, will not be impacted by the suspension. This means that only non-US clients who conduct transactions involving dollar bank transfers will be affected by Binance’s decision.
Customers can still opt for alternative fiat currencies or payment options to purchase cryptocurrency. For the small group of customers impacted, Binance intends to announce a new partner in the coming weeks and possibly explore the possibility of restarting the service
Binance’s Analysis of the Increase in Stablecoin Outflows
Reports indicate that stablecoins such as USDT and USDC swiftly left Binance for other rival cryptocurrency exchanges and self-custodial wallets following an update. The departure was rapid, with approximately $172 million worth of stablecoins exiting the exchange shortly after the announcement. The spokesperson attributed the significant outflow to the current bull market in the cryptocurrency market
The spokesperson also stated that
“After a positive market swing like the one we experienced last week, outflows always increase as some customers take winnings.”
The statistic only represents a small portion of the cryptocurrency assets held by Binance. In November of last year, Binance disclosed its proof of reserves, showing that it has $69 billion in cryptocurrency on hand.
Despite this, Binance seems to be strengthening its position as the industry leader following the demise of FTX. The cryptocurrency exchange launched a tax-calculating option on February 6 to help its consumers efficiently add up their anticipated tax on their crypto holdings.
Binance Introduces a Tool for Crypto Tax Reporting
Binance has introduced Binance Tax, a tool to assist customers in calculating their tax responsibilities on bitcoin transactions. The debut comes as numerous governments all across the world tighten their monitoring of cryptocurrency transactions.
Customers of the Binance network can download a tax summary report of profits and losses utilizing Binance Tax, which supports up to 100,000 transactions. The data includes spot trades, cryptocurrency donations, and incentives from forks of the blockchain, but excludes futures and NFTs. The tool is only presently accessible to customers in France and Canada; later this year, it will be made available in more international markets.
Final Thoughts
Likely, Binance’s planned stoppage of withdrawals in U.S. dollars will only last a short while. However, the anxiety among cryptocurrency investors is understandable. If you store your assets in a custodial wallet, whether it be for Binance or another cryptocurrency exchange, they may be in danger in the case of platform failure or become stranded if the exchange stops allowing withdrawals.
Given that one of the main benefits of cryptocurrency is that you may avoid depending on centralized systems, it’s important to consider other options for cryptocurrency storage.