Binance.US, a prominent cryptocurrency exchange, has made significant updates to its terms of service, suggesting a change in its policy regarding direct withdrawals in United States dollars.
The modifications, implemented on October 16, relate to the “BAM Fiat Wallet,” which encompasses Binance.US services pertaining to U.S. dollar custody.
Changes in Binance.US Withdrawal Options
Binance.US’s updated terms of service state that users now have the option to “convert” their U.S. dollar holdings into stablecoins or other digital assets for the purpose of withdrawing funds from their accounts. This alteration hints at a shift away from direct USD withdrawals on the platform.
Cryptocurrency enthusiasts took to various platforms, including social media, to confirm and discuss the change in Binance.US’s terms of service. Some expressed concerns about the ability to convert U.S. dollars into stablecoins or “shitcoins,” referencing the volatile nature of certain digital assets.
Insurance Protection Notice
Binance.US emphasized that digital assets stored on their platform are not eligible for insurance protection by the Federal Deposit Insurance Corporation (FDIC). This notice is in line with previous updates to their terms of service, underlining the risks associated with cryptocurrency investments.
Withdrawal Process Assurance
The updated terms of service also provide assurances regarding the withdrawal process. In the event that Binance.US terminates its relationship with a USD custodian and cannot secure another, they commit to giving users notice and a reasonable timeframe to withdraw their U.S. dollar deposits.
The latest terms of service updates significantly differ from a version posted in May 2023. In the earlier version, Binance.US indicated that they had collaborated with USD custodians, all to ensure custodians held U.S. dollar deposits in omnibus accounts at FDIC-insured banks. This raised the possibility of FDIC insurance coverage of up to $250,000 per eligible individual.
Challenges in Fiat Operations
Binance.US has been facing challenges in maintaining its fiat on-ramps and off-ramps over the past year. In June 2023, the platform also suspended U.S. dollar deposits and alerted customers to impending pause in fiat withdrawal channels. Although Binance.US later addressed the issues related to U.S. dollar withdrawals, they acknowledged that it might represent a temporary solution.
Binance.US’s updated terms of service signal a shift in its policy regarding direct withdrawals in U.S. dollars. Moreover, users are now presented with the option to convert their U.S. dollar holdings into digital assets or stablecoins for withdrawal. This change also underscores the challenges faced by cryptocurrency exchanges in managing fiat operations amid evolving regulatory and market conditions.