- Binance.US has informed users that their crypto holdings are no longer FDIC-insured
- The exchange has had FDIC insurance since 2019 but has recently stopped
- Customers can also no longer withdraw US dollars
Troubled exchange Binance.US has informed its users that their cryptocurrency holdings are no longer covered by Federal Deposit Insurance Corporation (FDIC) insurance. In an email sent to users, Binance.US stated that it had updated its terms of service related to deposit insurance in accordance with guidance from the FDIC, halting USD withdrawals at the same time. Binance.US has been hit hard by the charges brought against Binance and its CEO Changpeng Zhao in June by US authorities and only just avoided an asset freeze.
No More Protection for US Users
Binance.US said in a now-deleted 2019 blog post that customer accounts were insured up to $250,000, noting that “all USD deposits are held in pooled custodial accounts at multiple banks that are insured by the FDIC.” It also highlighted that these custodial accounts were structured to provide pass-through FDIC insurance coverage up to the $250,000 depositor coverage limit.
Things have seemingly changed in the interim, however, with the updated terms of service for the exchange now clearly stating, “Your accounts and digital assets are not eligible for FDIC insurance protections.” This means that, should anything happen to Binance.US, users’ crypto assets are no longer covered.
US Dollar Withdrawals Suspended
The lack of FDIC insurance isn’t the worst thing about the updated terms of service, with users no longer able to withdraw US dollars directly; instead, they must first convert them into stablecoins or another cryptocurrency. This change in withdrawal options adds an extra layer of complexity for users who were previously able to withdraw in fiat currency and adds concerns that Binance.US is in more trouble than it is letting on.
However, by withdrawing fiat options Binance.US is reducing the regulatory burden on itself, which may be the reason behind the move.
