Binance Boots US Traders - And How KuCoin Can Help

DISCLAIMER: None of the following is intended to be investment advice. This is only meant to be a description of what has worked well for me so far, and my own opinions. Also, full disclosure, my links to Coinbase, Binance, KuCoin, etc., include referrals. It actually benefits you to use them because we will both get an extra $10 worth of BTC for free if you deposit at least $100 to Coinbase. Thanks in advance if you follow the links when you make your accounts - and even if you don’t, I hope this guide helps you out!

On June 13th, 2019, Binance made two important announcements:

Binance will no longer allow US users to deposit or trade. On September 12th, 2019, their accounts will be locked for every purpose except withdrawal. “Binance.US” will be launched. This is a brand new platform created in partnership with BAM Trading Services Inc, and it is specifically tailored to United States users.

When I first heard this news, I became very concerned. Many people, including myself, considered quickly selling off altcoins or at least moving them to another reputable exchange such as KuCoin.

Now, I believed - and still believe - that Binance is a very capable company. They tend to do almost everything right, and even in the eventuality of a hack their “SAFU fund” has been proven to keep their clients’ funds safe. So, why am I worried?

Regulatory Issues

What this really comes down to is that laws in the US are extremely draconian with regards to securities.

A security is a tradable financial asset. The term commonly refers to any form of financial instrument, but its legal definition varies by jurisdiction. In some jurisdictions the term specifically excludes financial instruments other than equities and fixed income instruments. - Wikipedia

Basically, various regulatory agencies such as the SEC would love to classify many if not most cryptocurrencies as securities rather than currencies. If a cryptocurrency is classified as a security, it brings down a massive amount of regulatory overhead - work that needs to be done in order to keep the coin on compliance with US laws. Is it any wonder that most ICOs tend to just shrug their shoulders and disallow United States citizens from participating? Who would want to deal with this headache?

Well, eventually, the headache comes to you.

My suspicion is that Binance - being one of the largest and best exchanges - eventually got so big that a US regulatory agency sent them some sort of threatening letter. It would explain some of the things that don’t sit quite right with me:

Why didn’t they release Binance.US before announcing that United States users would be given the boot? Why don’t they have more information available? Major questions remain unanswered.

Now, in Binance’s defense, three months is a lot of time - time enough to get some questions answered, at least. This is not some sort of exit scam. Also, their representatives have suggested that the US exchange will be ready before the three months is up. For their sake and ours, I hope that’s true! Still, there are many lingering questions:

Which coins and tokens will be offered on Binance.US? It seems very unlikely that all - or even most! - of the existing assets will be tradable on the US platform. Will Binance Coin (BNB) be available on Binance.US? This is an enormously important question for Binance Coin’s continued success, especially the short term. On a personal note - what happens to Americans who have participated in their referral program? Binance has a great referral program - anyone you invite has a portion of their trading fees sent to you forever. It would be very disappointing if this benefit disappeared overnight for Americans who have participated in the program.

Some Potential Answers

Here’s what I think will happen.

I think that many coins and tokens will not make the jump from Binance to Binance.US, and I think that those coins and tokens will have their values slashed. As a result, I’ve - for the time being - traded most of my altcoins for “large cap” coins such as Bitcoin and Ethereum. I don’t think that BNB will be available on Binance.US immediately. I do think it will eventually be available there. If I’m right, BNB will take a price hit when it’s announced that BNB isn’t available on Binance.US. Either way, I think that BNB will continue to rise in value in the long term - as a result, I haven’t traded off my BNB. I might decide to reduce my position for safety’s sake soon. I have no idea what’s going to happen to their referral program. I tried asking on their subreddit, and I got the distinct impression that they haven’t really thought about it. Disappointing.

So What Do We Do?

Well, I can’t tell you what to do. But, I can tell you about some options. If you are an American who enjoys trading a wide variety of altcoins, you are probably going to have to find a new exchange. Binance.US is probably not going to cut it - as I said, the selection of altcoins will probably be very limited compared to what you’re used to. Some people have suggested that they will just keep trading on Binance through the use of a VPN - I may write an article about this later, but for now it suffices to say that I think that this is a very bad idea. Let’s talk about something more feasible.

KuCoin - A Safe Harbor?

KuCoin is an exchange which I’ve written about in the past. I’ve always thought of them as a contender in the crypto world - small, but growing. I have found KuCoin to be a safe and reliable exchange in which one can sometimes trade coins or tokens which haven’t yet made it to bigger exchanges like Binance. Now, KuCoin may represent something more: a safe harbor as Binance turns away its US customers.

Here’s the best news: KuCoin recently announced that, in addition to supporting projects run on Binance Chain, it will be supporting trading Binance Coin itself. This is huge. If you are American and want to be able to trade BNB after September 12th, KuCoin might just be your only option. Indeed, it might be your only option for a lot of coins and tokens you’re currently trading!

At the end of the day, you want to be prepared. You don’t want to be caught in a situation where you are unable to trade your assets and are forced to hold, even if the altcoin market turns bearish. Executive summary? Prepare yourself for the upcoming changes by making a KuCoin account. Check them out for yourself today!