After enacting two halts on Bitcoin withdrawals in under 12 hours, Binance has restarted withdrawals, citing congestion on the bitcoin blockchain.
The company noted pending transactions would have higher fees applied to encourage miners, the computers which run the network, to pick up the transactions. In Asia, withdrawals were down for over two hours on Monday.
In a statement, Binance said. “To prevent a similar recurrence in the future, our fees have been adjusted. We will continue to monitor on-chain activity and adjust accordingly if needed.”
Withdrawals had also been halted by Binance on Sunday for roughly an hour and a half, in a halt which Binance blamed on more blockchain congestion.
CryptoQuant data showed that on May 7th, Binance saw the highest ever net outflow of Bitcoin, at 175,646 tokens.
Bitcoin fell as much as 3.1%, before regaining some of the loss to trade around $28,230 as of 12:05 p.m. in Singapore. Other tokens showed similar activity, with an index of the biggest 100 digital tokens posting a similar decline.
Part of the recent problem arose when Bitcoin developer Casey Rodarmor released a protocol called Ordinals, which would allow individuals to mint nonfungible tokens (NFTs) on the network. That caused transactions on the Bitcoin blockchain to surge.
NFTs, a form of digital collectible, were most often based on Ethereum, however their introduction to the Bitcoin blockchain is a new function for a blockchain which had been more associated with store of value and payment functionality.
Hayden Hughes, co-founder of social-trading platform Alpha Impact noted that the introduction of Ordinals produced a “massive run up in network fees and congestion.”
In tweets referencing the halts, Binance told users, “rest assured, funds are SAFU” a crypto phrase indicating user funds are safe.
Digital asset platforms have been experiencing a crisis of confidence, following last year’s collapse in the market for crypto-assets, as well as high profile bankruptcies and scandals such as the collapse of cryptocurrency exchange FTX. Binance and its rivals have gone out of their way to dispel concerns about whether they have sufficient reserves.
Stefan von Haenisch, head of sales trading at OSL SG Pte in Singapore noted that the withdrawal fees charged by the exchanges had fallen short of the costs being charged by miners.
He said, “The queue of transactions pending verification for inclusion in the blockchain has experienced significant growth in recent days, causing an increase in transaction fees and confirmation times.”
