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Everything You Need to Know about Binance and its Formal Entry into the US

Binance, the world’s largest cryptocurrency exchange, announced that starting in September it will disallow U.S. residents from using its flagship exchange. Instead, it will launch a U.S.-based service, called Binance US, where U.S. passport holders will face restrictions when using the website.

Binance has been known for letting anyone use its services to trade tokens. The Malta-based exchange will partner with Bam Trading Services, a FinCEN-registered company with links to Binance-backed Koi Compliance, the “fully-managed solutions” department of over-the-counter (OTC) crypto trader Koi Trading. Binance Labs invested $3 million in Koi Trading on January 24.

Binance will no longer allow U.S. passport holders to sign up for the platform. Its terms and conditions read “Binance is unable to provide services to any U.S. person.”

Current users of the platform will enjoy a 90 day grace period, after which they can no longer deposit funds to the site or make trades. U.S. customers will retain access to funds held in the service.

If Binance, which lost $40 million due a hack earlier in Q2 2019, doesn’t plan to disrupt service to U.S. customers, its U.S. facing exchange will need to be online by September 12, when the 90-day grace period comes to a close.

Binance CEO Changpeng Zhao took to Twitter to allay fears.

Binance has said it would strengthen its compliance and security practices, which has perhaps been demonstrated through partnerships with software provider Chainalysis and KYC/AML tool provider IdentityMind.

“Binance constantly reviews user accounts to improve our platform security and to comply with global compliance requirements,” the company said. “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.”

The new exchange, which has no timeline for launch, will be called Binance US. Its technology will be operated by BAM, which has an address listed in San Francisco. Binance’s wallet and matching engine technologies will be used still.

“[W]e are excited to finally launch Binance US and bring the security, speed, and liquidity of to North America,” said Binance CEO Changpeng Zhao. “Binance US will be led by our local partner BAM and will serve the U.S. market in full regulatory compliance.”

Big questions remain as BAM might not be adequately licensed to do such business, as, while its registered as a money services business (MSB) with the U.S.’ Treasury’s Financial Crimes Enforcement Network (FinCEN), the registration document makes clear “FinCEN does not verify information submitted by the MSB,” and the document “reflects only what was provided directly” to the regulator. The company. Moreover, seems to only have registered to conduct MSB business in California. Binance will at the very least also need to seek to get a BitLicense to serve New York State residents.

“[It is an honor to partner with Binance … leveraging its tier-one security and technology in tandem,” said a representative of BAM Trading Services. “We are committed to providing a secure and compliant platform, and beginning the start of a fruitful alliance with Binance.”

Until this announcement, Binance listed 15 countries and six U.S. states (such as New York) on a “restricted countries list”.

The news about Binance US comes a couple weeks after we learned that Binance’s forthcoming decentralized exchange (DEX) will ban users from 29 countries, according to the Binance DEX website, which reads:

“It seems you are accessing from an IP address belonging to one of the following countries:

USA, Albania, Belarus, Bosnia, Burma, Central African Republic, Democratic Republic of Congo, Democratic People’s Republic of Korea, Cote D’Ivoire, the Crimea region of Ukraine, Croatia, Cuba, Herzegovina, Iran, Iraq, Kosovo, Lebanon, Liberia, Libya, Macedonia, Moldova, Serbia, Somalia, Sudan, South Sudan, Syria, Venezuela, Yemen, or Zimbabwe.”

Trading and accessing the Binance DEX wallet will be block users with IP addresses from these countries, actual location aside.

Binance CEO Changpeng Zhao tweeted on June 2 that this was untrue.

And later clarified once more.

“The messages being passed is wrong. (the website) blocks certain countries; DEX (the blockchain) does not, it can’t.”

Currently, US residents are the largest trader of cryptocurrencies, followed by Japan.

As Bloombergfdex notes, traders are moving altcoins into Bitcoin, which traded 2.4% Friday to $8,463, including Ether, Litecoin and EOS were in the red.Bitcoin is acting as a safe haven for other cryptocurrencies.

“It is the benchmark go-to store-of-value,” said Bloomberg Intelligence analyst Mike McGlone. Crypto Twitter chirped in, too.

“It’s very normal when crypto speculators, when they exit an asset class, they exit into Bitcoin,”Alex Kruger, a global macro and crypto trader, tweeted. “It’s just the asset of choice.”

Binance’s own token, BNB, decreased approximately 6.4% on Friday, according to data from CoinGecko.