Binance is Restricting US Customers from Trading Starting September 12th (But You Can Keep Your Coins on the Exchange)
Binance will restrict access to its exchange for US customers starting Sept 12th 2019. Customers can keep their coins on Binance after the cutoff, but won’t be able to trade.
This can be confirmed on the official Binance site. Read the official announcement from Binance here.
NOTE: US customers are also restricted from using Binance’s DEX exchange. US customers are also losing access to certain coins on Bittrex and Poloniex. See reasoning below.
TIP: When a certrain region is blocked from accessing an exchange or coins on an exchange it is called “geoblocking.” So US customers are geoblocked from Binance.
You Will Likely Be Required to KYC When You Withdraw
When you go to withdraw from Binance you will almost certainly be required to prove your identity (due to Know Your Customers KYC rules). The more crypto you try to transfer, the more likely it is you’ll have to prove your identity.
Binance is Opening a US Friendly Exchange
Even though US customers are losing access to Binance’s main site for trading, they won’t lose total access to the Binance brand. Binance plans to open a US friendly exchange.
Read about the US-based Binance exchange on the official post for that titled “Binance Announces Partnership with BAM to Launch US Exchange.”
“We are excited to finally launch Binance.US and bring the security, speed, and liquidity of Binance.com to North America,” said CZ (Changpeng Zhao), CEO of Binance. “Binance.US will be led by our local partner BAM and will serve the U.S. market in full regulatory compliance.”
NOTE: Binance has geblocked other countries as well, of those they have opened up exchanges that cater to blocked countries. In general those exchanges tend to have a limited selection of tokens, but tend to allow fiat to Bitcoin trading. For example, Binance Jersey (binance.je), an exchange designed to allow trading for Europeans to covert dollars to top cryptos, offers BTC, ETH, LTC, and BNB with the British Pound and Euro as base pairs.
Why is this Happening?
Blocking US customers from trading is common among crypto exchange due to unclear regulations in the US when it comes to coins that had an ICO after mid-2017.
The logic is that the SEC put out a notice warning that some ICOs could be unregistered securities offerings on July 25, 2017 via “Investor Bulletin: Initial Coin Offerings,“ and any con that had an offering after that is in legal limbo until clarity is offered.
We can see this with KIN for example. KIN is currently in a legal battle with the SEC.
Exchanges take on risk in the US allowing customers to trade any coin that is a security, but since it is unknown which coins are securities, many exchanges have been geoblocking US customers as a safe harbor.
Or at least, this is the basic logic. In almost all cases exchanges haven’t made a clear statement on why they are Geoblocking, and instead have just generally stated things like “because of the unclear regulation in the US.”
On July 25, 2017, the SEC issued a Report of Investigation under Section 21(a) of the Securities Exchange Act of 1934 describing an SEC investigation of The DAO, a virtual organization, and its use of distributed ledger or blockchain technology to facilitate the offer and sale of DAO Tokens to raise capital. The Commission applied existing U.S. federal securities laws to this new paradigm, determining that DAO Tokens were securities. The Commission stressed that those who offer and sell securities in the U.S. are required to comply with federal securities laws, regardless of whether those securities are purchased with virtual currencies or distributed with blockchain technology.
TIP: Most of what you need to know about the SEC can be read in between the lines from the SEC’s Jay Clayton via the SEC public statement “Statement on Cryptocurrencies and Initial Coin Offerings.” Specifically, if an ICO boasted about gains on a secondary market, didn’t have a working product built, and launched after the SEC issued a warning on July 25, 2017, they are likely getting geoblocked. Since many coins on Binance fit this bill, Binance seems to generally be geoblocking the US.
"Binance US Geoblocking Explained" contains information about the following Cryptocurrencies:
Binance Coin (BNB)