Note that the closure of cryptocurrency-friendly banks has really impacted the digital asset industry. In a nutshell, it makes it harder for large investors to transact capital, which directly affects their interest in crypto.

According to analysts, the current drop in trading volumes on centralised exchanges to a yearly low is just a consequence of this situation.

At the same time, there is also an outflow of funds from cryptocurrency investment products for large investors. In the past week, its equivalent amounted to $39 million.

More importantly, this is the sixth consecutive negative result. The total amount of outflows in a month and a half was $272 million.

What does it take to grow cryptocurrencies?

Major crypto sector partners in their banking sector included Silvergate, Silicon Valley Bank and Signature Bank. All three were closed or reorganised under the supervision of other financial institutions and regulators. However, former employees of some of the banks claimed that they could continue to operate, and their closures were allegedly the result of an initiative in US government circles.

According to Cointelegraph's sources, Binance specifically is also having problems with capital inflows from traditional sectors of the economy. The day before, Binance Australia suspended its Aussie dollar transaction services due to a breakdown in its agreement with a local payment provider. Consequently, it has become more difficult to connect with digital assets for people who don't know much about the subject and haven't tried P2P transactions, for example.

Given what’s happening, Australian exchange customers can buy BTC for about $5,000 cheaper. Following the announcement of the discontinuation of the Australian dollar transfer processing, deposits to the exchange in that currency via bank transfer were immediately suspended, while withdrawals via PayID service will remain open until June 1 at 5:00 p.m. local time. The exchange has also warned its Australian customers that any Australian dollars remaining on the exchange after May 31 will automatically be converted into USDT.

The announcement triggered a massive cash-out, which led to a significant drop in the price of BTC specifically on this particular platform. As of today, a single BTC can be purchased for as little as A$33,750, equivalent to about $21,987 and 21 per cent below the cryptocurrency’s average exchange rate.

However, it is almost impossible to buy and then withdraw BTC at such a bargain price: all because of the difficulties in converting the local currency and high fees. While this is a bargain for customers, the trading platform needs to solve the problem as soon as possible.

That said, Binance has a lot of money, and in theory the exchange could acquire its own bank loyal to the crypto industry. So why hasn’t the company done so yet? Here’s the relevant response from Zhao.

We have been considering such a possibility. The reality is much more complicated than theory. You buy one bank, it only operates in one country, and you still have to deal with the banking regulators of that country. That doesn’t mean you can buy a bank and do whatever you want.

Chanpen noted that if bank regulators oppose servicing crypto projects, they will simply take away the bank’s licence. It’s also up to the national government – just buying a bank won’t change its attitude towards a particular digital asset company in any way.

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Another important point is that the bank needs to work with partners, many of whom are also based in the US. They will impose their own conditions, for example, when cooperating with crypto projects banks will not process international transactions.

Finally, owning a bank is expensive. Zhao said that Binance would be unlikely to profit from such an initiative.

Banks do not come cheap. Banks are very expensive with very little business income. The amount of capital required is quite high and regulatory approval to buy a bank is the same or even more complicated than to set up a new bank, which is very onerous.

Here is the relevant issue of the Bankless podcast. We recommend reading it if you perceive English by ear.

Overall, the Binance chief sees a solution to the problem as moderate investment in some of the banks. In the long run, he says, such a strategy could help make financial institutions “more friendly” to the cryptocurrency market.

That said, not everyone in the industry chooses to follow this path. The cryptocurrency exchange Kraken, for example, received a licence to set up its own bank in the US in the autumn of 2020. However, the current actions of US regulators and the recent $30 million fine for the platform hints that there is no guarantee of a successful bank launch.


In the end, Changpen Zhao's position is clear: buying a bank in a particular jurisdiction will not solve all the inconveniences for cryptocurrency exchanges, as its actions will still be strictly limited by local rules from regulators. Therefore, we should not expect such a deal from Binance at the very least. Although it is possible that other giants are still considering such a possibility.


What do you think about it? Share your opinion in our cryptochat of former millionaires. There waiting for the onset of a new bullrun, which somehow is getting closer every day.