Binance US Likely to Delist Binance Coin (BNB) As Government Pressure Twists CZ
Here’s a thing or two about exchanges and general market places. They have been around for thousands of years. Rice traders in Japan set the precedence. Over time though, it has shifted from outdoor to indoor to now electronic. While regulation govern traditional exchanges, the onset of blockchain and the proliferation of digital assets birthed cryptocurrency exchanges, a headache for regulators across the globe.
At the center of this new burgeoning market space that amongst many factors is anchored on reliability and battle tested security measures, Binance is a standout. Founded two years ago at the height of the Initial Coin Offering boom, the Changpeng Zhao led team has surpassed everyone’s expectations.
After successfully raising $15 million and sinking it all in an exchange that was keen on abiding by the blockchain principles by being free from regulators’ probing while reassuring investors and clients of security, diversity and transparency, the exchange is nothing more than a behemoth. It continues to thrive, listing assets, bulwarking their coffers, liaising with other players and basing their operations from a country that on its own desires to be at the frontier, championing the causes of blockchain and cryptocurrency through favorable rules in Malta.
Regulation and The Need for Compliance
All the same, as Binance spreads its wings, varying rules and regulations especially in the stringent US could bog down their progress. Through an announcement last week, the exchange said they would be barring and effectively restricting US traders and investors from trading or investing through their ramp.
In line with this review of Binance’s terms and conditions aimed specifically at US clients, holders of digital assets are required to liquidate or transfer their assets to external wallets within a period of 90 days or by Sep 12. During this time, they wouldn’t deposit or post trades.
“After 90 days, effective on 2019/09/12, users who are not in accordance with Binance’s Terms of Use will continue to have access to their wallets and funds, but will no longer be able to trade or deposit on Binance.com.”
Observers say this is an attempt by Changpeng Zhao to go “legit”, budging after widespread accusations that the exchange could at the end of the day be behind a spate of pump and dump schemes as recently seen after the listing of all of their IEO tokens. Interestingly, Binance which is historically known for their aggressiveness and expansion is slowing down and transitioning adhering to applicable, jurisdiction specific rules as such demanding for personal rules from some of their users. Through an announcement, Binance said:
“As part of our continuing compliance efforts, Binance constantly reviews user accounts to improve our platform security and to comply with global compliance requirements. Accordingly, some users may be required to furnish evidence showing that their account registrations are consistent with Binance’s Terms of Use. Binance regrettably cannot continue to serve users who are found to have violated the Terms of Use and are unable to demonstrate otherwise.”
Launching a US Exchange Likely Without BNB
In the meantime, they are planning to comply with applicable rules within the US. As such, they will be launching a compliant exchange ran by BAM Trading Services and Koi Trading. Details around BAM Trading are scarce but searches around Koi Trading reveals that the crypto exchange offer OTC services for institutional traders.
Coincidentally, Binance is one of the many investors of Koi Trading with operations in amongst other cities, Beijing. Besides, Koi Trading is headed by Hao Chen who was the former CTO of Huobi US and the Senior Director of Engineering of Huobi Global. It must be noted that Huobi pulled the same maneuver, absolving them from criticism and launching their exchange in the US. From all indications, it appears that Binance may have contracted him to create a similar exchange in the US catering for the needs of their clients while reading from the same script with regulators.
If Binance US-which Changpeng Zhao says he won’t be participating in its development with no SAFU safety net, eventually, rolls out before Sep 12, it is likely that the number of coins or tokens on offer will be minimal. It is likely that decentralized coins and stable coins will be listed meaning the exchange’s liquidity will be thin and therefore unattractive to would be traders.
Hardly surprising, odds are the current fund hemorrhage from Binance.com would benefit other exchanges, forcing BNB value to drop as demands shrink. Note that most of Binance’s traffic is from the US and with this geo-restriction, volumes and by extension; liquidity will shrink negatively affecting BNB and the exchange’s global position.
But it doesn’t end there. Just like Huobi US isn’t listing its token, Binance US will not likely avail BNB for investors because by SEC selection criteria of what qualifies to be a security, Binance Coin (BNB) is all but a security. First, there is expectation of profit because of the coin burn feature, there is was an investment of money since they ran an ICO and their lottery ticket system for IEO participation says it all. Thirdly, there is investment in a common enterprise because the funds received from investors though BNB funds Binance’s operations and their expansion’s drive. In fact, Binance pays their employees in Binance Coin (BNB). Fourthly, Changpeng Zhao is shilling the coin meaning profits are from the effect from a third party.
