Some days I hate it when the world drops an absolutely-on-my-beat story into my lap when I already had a lot scheduled for a week.

So Binance et al just announced they will no longer process SWIFT payments of less than $100k, citing a new change in policy by Signature Bank which they purport applies to all of its crypto clients.

That suggests that a regulator recently asked a pointed question and did not like the answer it got back. (Or, in the alternative, that someone likely anticipated the question and reaction to the answer.)

If I were speculating out of the clear blue sky, I would assume that $100k is the threshold where a bank might choose to identify in its AML policy that any wires above will undergo secondary screening (sometimes called “enhanced due diligence”) *at the bank.*

And below that the bank might have made a risk-based calculation that routine retail use of a crypto exchange could rely on the exchange’s or sending bank’s AML/KYC policies.

And perhaps someone looked at that written part of the AML/KYC policy and said “Nah we’re not comfortable with that second clause anymore. We think the bank needs eyes on every transfer. And since we have no pre-existing process for that which is retail appropriate…”

I continue to be dumbfounded that Binance can get a bank account a) anywhere in the at-least-pretends-to-comply banking countries sphere of influence and b) in the U.S. specifically, and expect that bug to eventually be fixed.

“Why?”

They are operating a Bond villain compliance strategy and are open and notorious for it. Banking crypto exchanges will always involve some compliance risk, but if you bank Certified Good Actors, at least you can point to a reasonable basis for thinking you were OK.