Binance.US Revises Terms of Service: Halts Direct USD Withdrawals, Advises Conversion to Stablecoins
Summary:
Binance.US, the cryptocurrency exchange, has revised its terms of service, indicating a discontinuation of direct USD withdrawals. The update allows users to convert their USD funds into stablecoins or other digital assets to withdraw from the platform. Notably, the update highlights that digital currencies are not covered by the Federal Deposit Insurance Corporation's (FDIC) protections. The change follows several previous difficulties Binance.US has faced in maintaining its fiat to crypto and vice versa channels.
Binance.US, the cryptocurrency exchange platform, has refreshed its terms of service, hinting at a discontinuation of direct withdrawals in U.S. dollars. The revision to the terms of service took place on October 16, featuring substantial alterations in the section about the "BAM Fiat Wallet", which pertains to the exchange's USD-related services.
As per the altered terms, Binance.US said that account holders "might transform" their USD holdings into stablecoins or other cryptocurrencies to enable the withdrawal of USD funds from their accounts. Certain crypto enthusiasts, using X (formerly known as Twitter), verified the revised terms of Binance.US. One such user wrote, "Binance has held back USD. However, you can still purchase Tethers that are created out of nothing or low-ranking cryptos".
As was the case with previous updates in its terms of service, Binance.US highlighted that cryptocurrencies are not covered under the insurance protections provided by the Federal Deposit Insurance Corporation (FDIC). If it ends its relationship with a USD custodian, and cannot secure another, the company would give notice along with a period to withdraw any USD deposits, Binance.US noted in a May 5, 2023, update. Remaining USD deposits, not withdrawn by the deadline given, would be converted into stablecoin cryptocurrency and moved to the digital assets account.
The refreshed terms of service of Binance.US significantly deviate from those posted in May 2023. For example, details stating that BAM — the Binance.US operator — is not an FDIC member, not a bank, but had collaborated with USD custodians to ensure USD deposits are held by said custodians in collective accounts at FDIC-insured banks, have now been excised.
As per the previous terms of May 2023, if banks fail, customer funds could potentially be eligible for FDIC's insurance coverage up to $250,000 per eligible individual, subject to BAM and USD custodian adherence to rules. However, if the bank did fail, one's bank and fiat accounts could possibly be collated to ascertain eligibility for FDIC's deposit insurance. The FDIC's insurance didn’t cover BAM failures or malfeasance by a BAM employee.
Binance.US has yet to respond to Cointelegraph’s request for a statement on the matter.
This development is yet another instance of Binance.US's struggles to uphold its fiat to crypto and vice versa channels. The platform has ceased certain USD transactions over the last year. In June 2023, Binance.US hit pause on USD deposits and informed customers of an impending halt of fiat withdrawal services. Later, the firm stated it had addressed the USD withdrawal issues, but cautioned it could be a temporary fix.
Published At
10/17/2023 2:08:16 PM
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