Binance.US, a popular cryptocurrency exchange, has recently made changes to its terms of service, indicating that direct withdrawals in United States dollars are no longer supported on the platform. On October 16, Binance.US updated its terms of service, specifically the section regarding the “BAM Fiat Wallet,” which refers to services related to U.S. dollar custody.
According to the updated terms, Binance.US users now have the option to convert their U.S. dollar holdings to stablecoins or other digital assets in order to withdraw their funds from their accounts. This change has raised concerns among some cryptocurrency enthusiasts, who have taken to social media platforms to express their frustration. One user on Twitter wrote, “Binance seizes USD. Don’t worry you can buy Tethers printed out of thin air or shitcoins.”
It is worth noting that this new update follows similar changes in the past, in which Binance.US has emphasized that digital assets are not eligible for insurance protection by the Federal Deposit Insurance Corporation (FDIC). In a previous update on May 5, 2023, Binance.US stated that if they were to terminate their relationship with a USD custodian and fail to find another one, they would provide notice to users and give them time to withdraw their U.S. dollar deposits. Any deposits not withdrawn by the given deadline would then be converted to stablecoin digital assets and transferred to the users’ digital assets account.
The recent updates to Binance.US’ terms of service differ from a version posted in May 2023, which included information that BAM, the operator of Binance.US, is not a member of FDIC and is not a bank. However, it mentioned that BAM has worked with USD custodians to ensure that U.S. dollar deposits are held by custodians in omnibus accounts at FDIC-insured banks. The terms of use from May 2023 stated that, subject to compliance by BAM and the U.S. dollar custodian, the funds would be eligible for FDIC insurance coverage up to $250,000 per eligible individual in the event of a bank failure. However, it is important to note that FDIC insurance does not protect against the failure of BAM or any malfeasance by BAM employees.
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At the time of this writing, Binance.US has not provided any further comments or clarifications regarding the recent changes to its terms of service.
This news follows a series of challenges faced by Binance.US in maintaining its fiat on-ramps and off-ramps. In June 2023, the exchange suspended U.S. dollar deposits and notified its customers of an upcoming pause in fiat withdrawal channels. While the issue was eventually resolved, Binance.US warned that it could be a temporary solution.
In conclusion, Binance.US has updated its terms of service, indicating that direct withdrawals in USD are no longer supported on the platform. Users now have the option to convert their USD holdings to stablecoins or other digital assets for withdrawal. These changes have raised concerns among some cryptocurrency enthusiasts, particularly regarding the lack of FDIC insurance protection for digital assets. Binance.US has faced challenges in maintaining its fiat on-ramps and off-ramps in the past, and it remains to be seen how these recent changes will impact its users.
