What To Do When Banks Stop Fiat Withdrawals
Level 2 - Value Investor
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Banks are restricting crypto transactions - again!
From February 1st, Binance users will be unable to send or receive USD SWIFT wire transfers for amounts less than $100,000.
Yes, this means the average user won’t be able to cash out USD from Binance.
And. They won’t be able to put new fiat into the system to buy computer coins.
Bloomberg reports Signature Bank is decreasing it’s “exposure” to crypto. Other banks may follow suit.
History Of Banks Blocking Crypto
Banks restricting crypto payments is nothing new
‘We’re Suspending Payments to Binance’ - HSBC (source)
HSBC bans customers from buying bitcoin-backer MicroStrategy shares (source)
Crypto exchange Binance temporarily suspends payments from EU's SEPA network (source)
UK banks continue to take action against Binance (source)
The easiest thing for affected Binance users to do is transfer their coins to another exchange like Kraken or Coinbase and then withdraw dollars. But. This isn’t a long term solution. We expect bank restrictions on crypto to continue.
You should use a separate bank account only for transfers with crypto exchanges.
This means if you’ve already linked a crypto exchange to your bank account, you need to open a clean account at another bank or credit union for your usual bills, grocery shopping, etc.
Remember: your bank may suspend accounts which have interacted with exchanges.
How To Trade Fiat With DeFi
Our preferred solution is to trade crypto Peer-to-Peer.
Rather than hanging out in Internet forums trying to find trustworthy people to trade crypto with, DeFi makes it easy and secure with a Decentralized Exchange - DEX.
Most DeFi DEX swap between cryptoassets.
The Bisq Network is our preferred DEX for trading between crypto and fiat.
Here’s How It Works:
Download the trading software to your computer
Works with Windows, MacOS, and Linux but *not* on phones (Android/iOS)
Uses the Tor onion network to keep your IP address and location private
Functions as a hot wallet with its own seed phrase
Select a currency and payment method
USD: wire transfers and Zelle
EUR: SEPA payments and Revlout
Other major currencies (CAD, GBP, AUD, JPY)
Find a counterparty to trade with
either accept an existing offer; or
place your own offer which can be matched by another trader
Execute. When a trade is matched:
A smart contract multisig holds the seller’s BTC
the buyer is notified to make payment to the seller’s bank
when the seller confirms payment, funds are released to the buyer
if the parties don’t confirm the trade has settled, it can be referred to a dispute resolution process run by the Bisq DAO
DeFi Team Tips
The DeFi team has been testing this app from various countries and with different payment types to give you the inside track.
Check The Orderbook The prices you see on Bisq aren’t going to be the same as exchanges. If you are selling BTC, you can sometimes demand a slight premium over the spot prrice. If you’re buying crypto, you might need to pay more than you would on a CEX. If you want to trade quicker, you’ll need to place a more attractive offer, or accept an existing quote.
Chunk Your Payments Down: Fiat settlement can take up to a day and your funds (plus an extra security deposit) are going to be locked until your trade completes. When starting out it’s best to use small amounts and complete your transaction in multiple tranches. When your trade is being processed, you can use the chat box to let your counterparty know you’d like to do another transaction, then they know to look for your next offer in the order book.
If Your Payment Is Urgent… It’s best to post a competitive offer and wait for a taker. Someone who has manually accepted your payment will be online and usually ready to complete quickly as they just interacted with the software. If you take an offer, the user who posted it may not be online regularly (e.g. come online to batch process payments once per day, and they may not be in your timezone).
Find The Most Popular Payment Method To trade faster, in larger size, and at more competitive rates it’s best to check the most popular payment method for the currency you are dealing in. For Euros this will usually be SEPA or Revlout, for US dollars you should use Zelle.
Disputes
If you are selling Bitcoin the app automatically locks your funds in escrow. If the buyer does not settle the fiat transaction within the specified time limit (usually 1 day), you can open a dispute.
If you are buying Bitcoin and you send payment but the seller does not confirm receipt to trigger the release of BTC to your wallet, you can also open a dispute.
We recommend having evidence available (such as bank information showing proof of payment) in the event of a dispute. But. It’s better to limit disputes by keeping the value of transfers small and dealing with accounts who have a good reputation.
Resources
Refer to the getting started guide or watch a tour in video format.
Disclaimer: None of this is to be deemed legal or financial advice of any kind. These are opinions from an anonymous group of cartoon animals with Wall Street and Software backgrounds.
We now have a full course on crypto that will get you up to speed (Click Here)
Security: Our official views on how to store Crypto correctly (Click Here)
Standard Chartered Bank also blanketed banned a lot of crypto related website.
Couldnt use my credit card, but the P2P function on Binance worked for example.
Instead of crypto exchange showing up in bank account, some unknown sketchy quasi money transfer business third party shows up in bank account?