Binance.US has announced a significant change to its terms of service, effectively ending the ability for users to make direct withdrawals in US dollars.
The update, which went live on 16 October, changed policies related to the ‘BAM Fiat Wallet’, specifically regarding how customers can withdraw US dollar funds from the platform.
According to the updated terms, users wishing to withdraw in US dollars will first need to convert their funds into a stablecoin or another digital asset before completing the withdrawal.
Binance.US stricter terms amid regulatory pressure
The move follows a suspension of US dollar deposits by the exchange earlier in June.
Binance.US cited the “extremely aggressive and intimidating tactics” used by the US Securities and Exchange Commission (SEC) as the reason behind its decision.
This regulatory pressure has caused its banking partners to become cautious about engaging with the cryptocurrency industry.
Furthermore, the new terms of use published this week indicate that US dollar funds held in Binance.US wallets will no longer be insured by the Federal Deposit Insurance Corporation (FDIC).
This change is a departure from the company’s stance in May 2023, where it mentioned working with US dollar custodians to ensure that deposits were held in accounts at FDIC-insured banks.
Binance.US communicated in a customer email that the removal of the FDIC insurance language was in response to guidance from the FDIC itself.
The new terms of service said: “Digital Assets are not legal tender, are not backed by any government, and accounts and value balances are not subject to protections or insurance provided by the FDIC or the Securities Investor Protection Corporation.”
Community reaction to new Binance.US TOS
The crypto community has expressed concern over the announcement, with several users taking to social media platforms like X to voice their frustrations.
The common sentiment appears to be confusion and disappointment, particularly regarding the options for withdrawing funds in US dollars.
One user posted: “Too late to withdraw your dollars from Binance US. Now you can just withdraw shitcoins, so who gets the USD if nobody can withdraw it?”
Another said: “Please withdraw all your funds from Binance! Bad news just been announced, & more terrible news is on the way. Binance changed TOS [terms on service].”
Binance vs SEC
This development is part of the ongoing legal issues surrounding Binance.US. On 5 June, the SEC filed a lawsuit against the exchange’s US branch, international counterpart, and founder Changpeng ‘CZ’ Zhao.
The lawsuit accused them of operating unregistered securities platforms. Since then, the SEC has scrutinised the company’s custody practices and its compliance with legal requests.
Following the lawsuit, Binance.US had anticipated issues with US dollar withdrawals. On 13 June, due to the legal actions and resulting concerns from its banking partners, the company announced a temporary pause on withdrawals, signalling a shift towards an all-crypto exchange model.
By 23 June, Binance.US had restored US dollar withdrawals but cautioned users that it might have to stop these services again, pending securement of additional banking partnerships for USD transactions.
Currently, the SEC is seeking access to Binance’s documents and wants to conduct depositions with BAM’s top executives. However, a recent decision by a magistrate judge has denied the commission’s request for immediate access.
