The SC has banned the use of Binance, making waves among Malaysian cryptocurrency investors. Learn more about Binance and the ban.
Despite recent efforts to improve regulatory compliance, Malaysia has recently banned Binance. Binance has also shut down its profitable derivatives operation in Germany, Italy, and the Netherlands, anticipating additional regulatory issues elsewhere.
While various forms of cryptocurrency in Malaysia are somewhat trending (with a recent spike in interest towards the blockchain-related NFTs in particular), the country is no stranger to taking caution where caution is due.
Securities Commission Malaysia has ordered Binance to shut the Binance.com website and mobile applications in Malaysia within 14 working days of July 26, cease all marketing efforts, and prevent Malaysian investors from accessing Binance’s Telegram channel. This coupled with a reprimand to Binance for illegally running a digital asset exchange in the nation. Binance Holdings Ltd., Binance CEO Changpeng Zhao, and three additional Binance firms — UK-registered Binance Digital Ltd., Lithuania-registered Binance UAB, and Singapore-registered Binance Asia Services Pte. Ltd. – were those companies that received a reprimand.
What is Binance and how does this affect the financial technology and cryptocurrency markets in Malaysia? Let’s find out.
Contents
What is Binance Coin (BNB)?
Binance Coin (BNB) can be described as a cryptocurrency that can be used to trade and pay fees on the Binance cryptocurrency exchange.
The Binance Exchange had been the world’s biggest cryptocurrency exchange as of January 2018, processing over 1.4 million transactions per second. As an incentive, Binance Coin users enjoy a reduction in transaction costs on the Binance Exchange. Bitcoin, Ethereum, Litecoin, as well as other cryptocurrencies could be exchanged or traded for BNB.
Beyond the Binance exchange, the Binance Coin, like some other nascent cryptocurrencies, has a range of uses, including as a means of payment on certain sites from booking travel arrangements to investing.
Binance, which was formed in China before leaving due to the country’s ban on domestic cryptocurrency trading, has come under fire from regulators all over the world for its stock tokens, derivatives trading services, and know-your-customer methods. The Cayman Islands, Germany, Hong Kong, Italy, Japan, Lithuania, Malaysia, Poland, Thailand, the United Kingdom, and the United States are among the authorities that have issued warnings or begun investigations into Binance.
Binance Coin was launched in July 2017 and worked with the ERC-20 token on the Ethereum blockchain before becoming the native currency of Binance’s blockchain, the Binance Chain.
Among all the innovative financial technology Malaysia has faced in recent times, blockchain-related platforms stand out as some of the most prominent. However, plenty of regulatory diligence and careful evaluation naturally follows any new entry in many parts of the world, and Malaysia is no different.
Why is Binance Banned in Malaysia?
The Securities Commission Malaysia’s (SC) cautions investors not to invest with companies or persons that are not licenced or approved. To help Malaysians recognize such entities the SC has an Investor Alert list which now includes Binance.
Binance is operating a “known market without authorization,” according to the SC’s official explanation for placing it on the Alert List.
According to Decrypt, Binance might have been blacklisted because it offered the Ringgit on its peer-to-peer exchange while not having the required licence. It also pushed its platform to Malaysians and attempted, without success, to launch a crypto debit card in the country.
Malaysians’ access to Binance has been restricted by the SC. It announced on July 30 that it would take legal action against Binance if it continued to operate unlawfully in Malaysia. It has given Binance 14 working days from July 26, 2021, to disable the Binance website (www.binance.com) and mobile applications in Malaysia.
The SC has also encouraged anyone with a Binance account to immediately stop trading and withdraw all their funds.
If you choose to continue trading on Binance despite all the warnings given, be aware that Binance may choose to prohibit ringgit deposits and withdrawals, like what happened in the United Kingdom after the platform was recently outlawed there.
What Can You Do If You’re Still Using Binance?
4 options are available to you if you happened to have missed the news and are now trying to figure out what to do.
Option #1. Move all your Binance funds to SC-approved licensed exchanges
This option is likely the best for long-term investors (aka holders) and some traders. This is also the option Securities Commission Malaysia very likely prefers you take.
As of the time of writing, there are 4 licensed digital assets exchanges in Malaysia: Luno, Tokenize, Sinegy and (the newest) MX Global. If you don’t already have an account, create one, register it, and start making transfers.
On Binance, be mindful of how you choose to withdraw your funds. If you want to withdraw BTC, you should use the Bitcoin network. If you’re withdrawing ETH, stick with the Ethereum network you’ve chosen and don’t move to Binance Smart Chain. This is critical. Your cash will never arrive if you switch chains to withdraw. It’s gone for good.
What if you have a cryptocurrency that isn’t one of the five that Malaysia allows: Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC), and Bitcoin Cash (BCH)? How do you make a withdrawal to one of Malaysia’s licenced digital asset exchanges? The answer is you can’t, so you must (1) convert them all to any of the 5 cryptocurrencies above, or (2) Use options 2-4 below.
Option #2. Move all your Binance funds to other international exchanges
Although Binance has been blacklisted, other international exchanges such as Kucoin and Huobi are safe (for now). They have a good reputation as legitimate trading platforms, therefore traders who want to trade more than the five cryptocurrencies allowed in Malaysia can go there.
Of course, by selecting this option, you acknowledge the dangers associated with utilising unregulated sites, including a lack of protection. Do your homework and assess the risks before you make your move.
Option #3. Continue using Binance (while you can)
It’s evident from internet conversations that the Binance ban in Malaysia hasn’t fazed some users. With a DNS change and using a VPN, these users are still going at it.
However, this is presuming Binance does not block anyone who registered with a Malaysian ID, as many might have done did during the KYC process.
Option #4 – Use non-custodial crypto wallets
This option is suitable for DeFi users, GameFi players, blockchain developers, builders, NFT collectors, holders of cryptocurrencies other than the 5 allowed, and more; in particular if you do follow appropriate digital security practices. It’s akin to keeping gold in your own safe; the responsibility for keeping it safe falls entirely on your shoulders.
In case it isn’t clear, you are solely responsible for keeping your assets safe. There is no way to retrieve cash if you’re a victim of fraud, or if you make mistakes.
So, why do you want to keep it? You don’t have to; you may just retain your funds in regulated exchanges. However, this option provides you with the most direct control of your assets and allows you to interact with blockchain platforms and networks. You may keep gaming (and earning money from it), farming, building, collecting, and doing whatever else you want with non-custodial crypto wallets.
Even if you leave your cryptocurrency in Binance and are unable to access it, the funds will remain in the exchange. You won’t be able to access it, but it should be safe until you figure out how to do so, or until Binance is licenced in Malaysia, whichever comes first.
Conclusion
The SC conducts investing education programmes and enacts legislation to protect us from fraud. Knowing that the SC has put Binance on its Investors’ Alert List should give you grave concerns over continuing to use Binance.
If you are still using Binance, it is time to decide for yourself which of the 4 given options best suit your needs. Do be aware that the SC does state that investors who deal with unregistered or unapproved organisations or individuals run the danger of fraud and money laundering, and they may not have legal redress if a disagreement occurs.
Which of the 4 options did you choose?
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