Binance's SWIFT Payments Setback Unlikely to Have Material Impact on Wider Industry: Julius Baer

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A leading institutional analyst says the recent news from Binance that some Swift payment services would be restricted will likely have little impact on the broader industry.

Binance said one of its SWIFT partners, Signature Bank, will restrict transactions for clients with U.S Dollar-held bank accounts where transactions were set at less than $100,000.

"Please be advised that until we are able to find an alternative solution, you may not be able to use your bank account to buy or sell crypto with USD via SWIFT with a value of less than $100,000 USD after February 1st, 2023," said Binance.

Julius Baer, the Swiss private bank, says the impact of the decision would prove restrictive towards crypto trading activity and may prevent some retail customers with smaller trading amounts from accessing crypto.

SWIFT is the world's largest and most important financial network, carrying out trillions of dollars of international money settlement daily, and allows clients to transact with the Binance platform using their bank accounts.

Binance says impacted clients would still be able to utilise credit cards.

The decision by Signature Bank is however expected to be of little longer-term impact on Binance and the crypto industry as a whole.

"Overall impact is yet to be seen but it appears that there are not many retail customers who use SWIFT to process fiat to crypto transactions," says Kelly Chia, equity research analyst for Asia at Julius Baer.

It is reported the number of monthly users of Binance that Signature Bank serves is under 0.01%.

Binance said that its other banking partners have not been impacted and that it is "actively working to find an alternative solution" for the affected users.

"We are unsure of the initiator of this move to up the processing amounts to USD 100,000, but we see it as part of the road to institutionalise digital assets," says Chia.

The analyst says he does not discount the chances that the regulatory hurdles keep getting higher in the future.

"Crypto asset prices have moved significantly higher in the last two weeks and could be due for some consolidation," he adds.