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Binance.US Terms Update: USD Withdrawal Changes

Martin Walker
Oct 18, 2023 at 07:47 am

Binance.US, a prominent cryptocurrency exchange, has recently made some noteworthy alterations to its terms of service, suggesting a shift away from the facility of direct withdrawals in U.S. dollars from their platform.

The alterations were officially implemented on October 16, when Binance.US updated its terms of service. In particular, modifications were made to the section related to the "BAM Fiat Wallet," which essentially encompasses services pertaining to the safekeeping of U.S. dollars.

In the updated terms, Binance.US explicitly mentioned that users now possess the option to "exchange" their holdings denominated in U.S. dollars for stablecoins or other digital assets. This newfound flexibility enables users to proceed with their desired fund withdrawals.

In response to these modifications, several cryptocurrency enthusiasts took to social media platforms, such as the erstwhile Twitter, to corroborate the recent changes in the terms of service on Binance.US. A crypto observer even chimed in, stating, "Binance no longer allows direct USD withdrawals. However, you have the option to purchase Tethers, which are essentially printed out of thin air, or other less reputable coins."

In alignment with their prior updates to the terms of service, Binance.US emphasized an important point—that digital assets are not covered by insurance protection provided by the esteemed Federal Deposit Insurance Corporation (FDIC).

The updated terms also shed light on a hypothetical scenario where Binance.US terminates its relationship with a USD custodian and struggles to secure an alternative custodian for U.S. dollars. In such circumstances, the platform commits to notifying users and affording them ample time to withdraw their U.S. dollar deposits. Any U.S. dollar deposits left unclaimed beyond the provided deadline will be systematically converted into stablecoin digital assets and then seamlessly transferred to the respective digital assets account.

Notably deviating from the version published in May 2023, the latest updates to Binance.US' terms of service conspicuously removed certain content regarding BAM—Binance.US' operator—not being a member of FDIC and not operating as a bank. In the previous version, significant emphasis was placed on BAM's collaborative efforts with USD custodians to ensure U.S. dollar deposits are securely held by custodians in omnibus accounts at FDIC-insured banks.

Based on BAM's and the U.S. dollar custodian's unwavering adherence to pertinent regulations, BAM envisioned making the funds eligible for FDIC insurance coverage, subject to a limit of $250,000 per eligible individual. This coverage, however, would be activated solely in the unfortunate event of a bank experiencing a failure, as elucidated in the terms of use from May 2023. Additionally, the terms clarified that FDIC insurance does not offer protection in the event of BAM's failure or any wrongful actions perpetrated by any BAM employee.

This recent development underscores the ongoing challenges faced by Binance.US in ensuring the smooth functioning of its fiat on-ramps and off-ramps. Over the past year, the exchange has encountered disruptions in certain U.S. dollar operations, further underscoring the complexity of this domain.

Back in June 2023, Binance.US temporarily suspended U.S. dollar deposits, prompting them to communicate this to their valued customers, providing advance notice regarding the impending suspension of fiat withdrawal channels. The firm later stated that they had successfully addressed the U.S. dollar withdrawal issues, albeit cautioning that this resolution could potentially serve as a temporary fix to the prevailing concerns.

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