US residents still using Binance for trading received a surprise this week. According to The Block, Binance is beginning to block U.S. residents from using their exchange. More than a year after claiming that they would be disallowing US access to the exchange, many are wondering what could prompt such decisive action? How can US traders on the receiving end of these messages continue their crypto related activities?
This isn’t something new. In Mid 2017, Bitfinex decided that it would be removing access to its platform for US clients, citing regulatory uncertainty in the States. 2 years later, Binance appeared to follow suit, announcing in July of 2019 that it would be shutting its digital doors to Americans, promising a replacement, BinanceUS, available within a few months of the September deadline for US users to remove their funds from the platform.
With that plan in place, the actions that Binance ended up taking seem a little conflicting. Initially their terms and conditions were altered to contain wording prohibiting US residents from using the platform. New users were presented with a check box to click asserting that they were not accessing Binance from the US. While Binance never publicly announced their plan for detecting US users, it appears to be widely known that little, if anything, was done to actually prevent Americans from creating new accounts or continue using old ones.
Recently, in New York State, a lawsuit has been filed against forty-two companies and projects globally including Binance, BitMex, Block. One, and the Tron Foundation naming CEOs and other staff.
So much highly publicised legal action was bound to swing the magnifying glass back over Binance, the largest target in crypto. Forbes ran an article earlier this week containing apparent evidence that BinanceUS is a calculated smoke screen; that its primary purpose is to keep regulators occupied with frivolous licensing applications, hearings, and other legal proceedings so that Binance itself could continue business as usual.
The emails sent to many Binance users state that any and all US users have 90 days to withdraw all funds from the platform before they will lose access. These traders are now tasked with finding a new place to trade, many of them likely for the first time. There is no shortage of other exchanges available worldwide, a portion of which also offer access in the US. Some users may find these options too risky considering their current predicament.
If you were to base an estimate of how much of Binance’s user base and volume come from US citizens on their website traffic, you might get a surprising result. The United States is second only to Russia in percentage of visits according to SimilarWeb.
Reportedly once the new restrictions go into place, IP address-based geofencing will prevent the former clients from accessing the platform. It is yet to be seen what additional steps, if any, will be taken by Binance to curtail American trading, or what the penalties or consequences might be for those who chose to circumvent these measures. Furthermore, if many feel that it is simply not worth the risk will this mass exodus eliminate some of the allure for other users who would need to use illicit methods to continue trading there?
One solution to solve this problem is simply choosing a US based exchange. Among those available, Beaxy Exchange, out of Chicago, has really taken advantage of this situation and is offering amazing incentives for users to switch over, Bitcoin Bonus like a $500 deposit matching program and innovations like Trender, a unique mobile feature using swipe-based trading that acts on professional and AI technical analysis. Security is soundly addressed, with digital asset custody provided by Curv and fiat integration provided by PrimeTrust boasting FDIC insurance up to $250,000. The PrimeTrust partnership also makes Beaxy one of only three exchanges in operation to offer its retail users on and off ramps for the 6 major global currencies (U.S. Dollar, Australian Dollar, Candian Dollar, Euro, British Pound, and Japanese Yen) as well as the crypto-fiat trading pairs to go with them.
Many people involved in cryptocurrency have strong feelings about regulation, and there are undoubtedly strong arguments on both sides of the fence. When it comes to exchanges, however, it seems likely that an increase in regulation is inevitable.
Many of the concerns that people have expressed regarding the possible illicit uses of cryptocurrency such as money laundering, tax evasion, or other criminal activity can in part be mitigated by compliance and regulation. Assuaging these fears could lead to increased participation and adoption, bringing new users and interest to the space.
US based and regulated exchanges such as Coinbase, Gemini, and Beaxy are helping shine light into the darker corners of crypto, striving to make infamous hacks like Mt.Gox or Cryptopia a thing of the past.
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