Binance marks second birthday with US expansion

Binance recently updated its terms of use agreement, stating “Binance is unable to provide services to any U.S. person.” This is expected to go into effect within 90 days. To ensure the exchange is still able to serve US-based traders, Binance has partnered with the biggest regulator of all, announcing a partnership with FinCEN-registered BAM Trading Services to create a fully regulated Binance division on US soil.

Binance’s American cousin

While Binance has always remained compliant, it has had to carefully navigate the global regulatory landscape to remain so. In the last year, these efforts have become more precarious, with the exchange even advising Iranian users to withdraw their money to comply with US sanctions.

As the exchange celebrates its second birthday — marking just two years since the release of the Binance white paper — founder Changpeng Zhao has announced plans for a new platform that will be fully compliant with virtual currency law in the United States. "The markets are mature enough that we want to find a way to service US users," said CZ in a video AMA.

But the level of service offered to American users might differ from the Binance they are familiar with. CZ said in a recent Periscope AMA, that while the exchange will run under Binance’s name, and use the same matching engine and wallet technologies, it will function as a separate entity, with Changpeng himself having no legal titles or operational role.

Operated by BAM trading services with guidance from CZ and his team, the exchange is expected to lack some of the features that have helped Binance grow so rapidly. The SAFU fund that was recently used to bail out victims of a hack will not be available to users of Binance.us by default. And it is not yet clear how many of the hundreds of coins that Binance makes available on the main platform will be considered compliant enough to be listed in the US.

Traders anticipating a fall in prices are already circulating a list that suggests which altcoins could be available on the exchange, but as CZ clarified in the AMA , these are yet to be confirmed.

The status of the flagship exchange token $BNB is also uncertain, but if Binance Jersey, Binance Uganda, and Binance Singapore are anything to go by, then we expect the token to have a presence, especially as US regulators are able to benefit from real-time transaction monitoring of the coin through Chainalysis.

But regulatory compliance has its limits, and although the new exchange could be expected to resemble its parent in look and feel, some commentators are already suggesting that the real future of Binance is decentralized. Though the domain of Binance’s DEX is now out of reach for US users due to geo-blocking, the decentralized exchange mechanism itself can still be accessed via a host of software wallets, VPNs, and hardware wallets like Ledger.

New territories

As Binance again pivots into new territory, it moves towards competing with the more conservative, regulatory-friendly US exchanges, Coinbase and Kraken.

Meanwhile, the exchange’s altcoin-focused former rivals —Poloniex, Bittrex, and Bitfinex — are still suffering from regulatory setbacks. After being accused by the New York Department of Financial Services of selling cryptocurrency to users from sanctioned nations, Bittrex was denied its request for a Bitlicense to operate in New York. Bittrex announced last week that it would be making certain trading pairs unavailable to U.S. customers as a result.

This follows a similar move from Poloniex, which cited general ‘regulatory uncertainty’ in the US as the reason for removing nine altcoins that could potentially be categorized by regulators as securities.

And while Bitfinex has built out a decentralized alternative in the form of Ethfinex, it is also feeling the regulatory pressure — with reports that KYC procedures have been stepped up amid the ongoing legal battle with the New York Attorney General.

Binance meanwhile, seems to be a step ahead, with plans for a limited platform to serve US users and a decentralized alternative that is expected to grow significantly in the medium term.