Cryptocurrency exchange Binance.US has made changes to its terms of service, indicating a shift in its support for direct withdrawals in United States dollars. The update, which was implemented on October 16, focuses on the “BAM Fiat Wallet” section, which pertains to Binance.US services related to the custody of U.S. dollars.
According to the revised terms, Binance.US users now have the option to convert their U.S. dollar holdings into stablecoins or other digital assets in order to withdraw funds from their accounts. This change was confirmed by various cryptocurrency enthusiasts who took to social media platform X (previously known as Twitter). One observer criticized the decision, stating, “Binance seizes USD. Don’t worry, you can buy Tethers printed out of thin air or shitcoins.”
Furthermore, Binance.US emphasized in the updated terms that digital assets are not eligible for insurance protection from the Federal Deposit Insurance Corporation (FDIC). In a previous update on May 5, 2023, the company assured users that in the event their relationship with a USD custodian is terminated and a replacement cannot be found, they would be given notice and time to withdraw their U.S. dollar deposits. However, any remaining funds not withdrawn by the specified deadline would be converted into stablecoin digital assets and transferred to the user’s digital assets account.
Comparing the latest terms of service with a version posted in May 2023, there are notable differences. The previous version included information indicating that BAM, the operator of Binance.US, is not a member of FDIC and is not a bank. However, the company claimed to have collaborated with USD custodians to ensure that U.S. dollar deposits are held in omnibus accounts at FDIC-insured banks. At that time, the intention was for the funds to be eligible for FDIC insurance coverage limit of $250,000 per eligible individual, only applicable in the event of a bank failure.
Binance.US has not yet responded to requests for comment on these changes.
This development is part of a larger trend of Binance.US facing challenges in maintaining its fiat on-ramps and off-ramps. Over the past year, the exchange has suspended certain U.S. dollar operations. In June 2023, Binance.US temporarily halted U.S. dollar deposits and warned customers about a pause in fiat withdrawal channels. The issue was later resolved, albeit with a caveat that it may not be a long-term solution.
It is important to note that the Binance.US terms of service update does not affect the services provided by the global Binance platform. The changes specifically pertain to Binance.US, which operates within the regulatory framework of the United States.
As the cryptocurrency industry continues to evolve, regulatory and operational changes implemented by exchanges like Binance.US are crucial in adapting to the evolving landscape and ensuring compliant operations.