Binance has announced that it will no longer allow US citizens to use its primary exchange services. American customers have been given a 90 day grace period, after which deposits and trading will be blocked. This change comes just one day after the company had revealed that it is going to create a platform exclusively for customers in the United States.
The adjustment in Binance’s platform structure is part of an attempt by the Malta-based company to cooperate with different financial regulators. To manage the new US branch, Binance has partnered with BAM Trading Services, a California-based company certified by the US Treasury as a money services business (MSB). Binance has yet to provide further details on its US platform, although it most likely will have strong know-your-customer (KYC) requirements and other mechanisms to ensure compliance with American securities laws.
The lack of information about this change has drawn the ire of many traders, notably from the American community that has played a key role in making Binance a top global exchange. So far, key details about the new platform are still unknown, including how the transition will take place, which trading pairs will be offered, and how Binance’s own token BNB will be integrated into Binance.us, if at all. But most importantly, the ability to trade anonymously is highly valued across the blockchain space, and until now Binance does not force customers to reveal their identities.
It is no secret that the US Securities and Exchange Commission (SEC) and the Internal Revenue Service (IRS) are struggling to reign in the growing digital currency market, which continues to operate largely outside of their regulatory grasp. The problem for these agencies is that forcing digital currency exchanges to comply with rules designed for traditional financial markets cannot succeed long-term. The result of this is a regulatory game of Whack-A-Mole where one exchange is strong-armed into proper compliance only to be replaced by another willing to ignore the current rules.
Binance CEO Changpeng Zhao has acknowledged the frustration felt by many users, yet has defended the decision, stating that “some short-term pains may be necessary for long term gains.” No doubt many Americans believed that Binance would not easily give in to American regulators given how proactively the company has avoided control from China. Nevertheless, Americans should not be surprised by this announcement. Binance already blocks residents of six US states, and its decentralized exchange BinanceDEX will not be available in the US at all.
Altcoin values have plummeted on the news, whereas Bitcoin has moved up slightly. Binance has assured that Binance.us will be operational before the 90 days grace period ends. How willing customers are to use it remains to be seen once further details emerge.
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