What Is Binance, And Why Is Everyone Talking About It?
If you’ve been scrolling through your social media feeds or meeting up with friends for socially distanced catch ups, you may have come across a mention of Binance. Perhaps you’ve heard that you can use it to trade cryptocurrencies, or to earn income on the side. And if that has piqued your interest enough to try to open a Binance account, you may have also noticed something else – the exchange isn’t actually authorised in Malaysia.
What does this mean for aspiring traders and investors? Here’s what you need to know about Binance, and whether you can use it in Malaysia.
What’s the deal with Binance?
Binance is one of the biggest cryptocurrency exchanges in the world. On April 13, a total of US$40.33 billion was traded on the exchange over the course of 24 hours – that’s over 50 times more than the volume traded on the Bursa Malaysia, which totalled RM3,146.74 million (or US$0.77 billion) when the market closed on the same day.
What makes it so popular?
- Lots of cryptocurrencies. Binance allows you to trade over 150+ different cryptocurrencies.
- Other features. You can earn more cryptocurrency through staking (keeping your funds in a cryptocurrency wallet to earn rewards), lending your funds for interest returns, earning rewards for completing challenges and more.
- Low fees. Fees start at 0.1% and go as low as 0.012% if you meet certain trading or referral requirements.
Besides that, the exchange is also responsible for creating what is now (at the time of writing) the world’s third most valuable cryptocurrency behind Bitcoin and Ether: the Binance Coin (BNB). It’s used to buy and sell other cryptocurrencies on Binance, as well as to cover trading fees. As of April 25, it is valued at US$505.08. That’s nearly a 3000% increase from the same date last year, outpacing even Bitcoin, which rose 547% in the same period.
Can you use Binance in Malaysia?
Officially, no. But technically…
Here’s the thing: Binance is listed on the Securities Commission Malaysia’s (SC) Investor Alert List, which identifies unauthorised websites, products, companies or individuals. The SC advises investors not to invest with any companies or individuals that aren’t licensed or approved.
The SC’s official reason for placing it on the Alert List is that Binance is operating a “recognized market without authorisation”. Decrypt reported that Binance could have been blacklisted because it made the Ringgit available on its peer-to-peer exchange, despite not having the license to do so. It also promoted its platform to Malaysians and also tried to release a crypto debit card in Malaysia without approval.
But that’s not stopping Malaysians from using the platform. A cryptocurrency trader we talked to revealed that Binance is still popular among Malaysian investors and traders, thanks to the range of currencies tradable on the platform.
Does this mean Binance is not safe to use?
The SC is a valuable reference for investors. It carries out investment education initiatives and issues regulations that keep us safe from fraud. “Investors who deal with unlicensed or unauthorised entities or individuals are exposed to various risks, including fraud and money laundering, and may not have access to legal recourse in the event of a dispute,” the SC warns.
While Malaysians are advised not to deal with unlicensed entities, being on the SC’s Alert List doesn’t necessarily indicate a fraudulent platform. Binance is not licensed or regulated in Malaysia, but there are a few exchanges under the Binance brand, including Binance Singapore and Binance.US, which are fully compliant with the local regulations of the countries they operate in.
You can still technically choose to invest with Binance anyway, but you’re doing so at your own risk. And the risks are sometimes high – a quick glance of the Binance subreddit shows a ton of threads from disgruntled users who discovered missing coins or have been locked out of their accounts. According to these users, the Binance’s customer support only responds to their cases weeks later, if at all.
Some US citizens shared that they were able to resolve their account issues by reporting to the Consumer Finance Protection Bureau. Malaysians won’t have this option, as the exchange is not regulated here.
Recently, a Malaysian user also shared on a Facebook Bitcoin group that their account had been frozen when attempting to buy a cryptocurrency with their BigPay card. When they contacted customer support, they were told that they had identified themselves as one of the “unsupported countries”, and that Binance’s services are no longer available to them. The user was not able to withdraw their account holdings.
Challenges in accessing an unauthorised site
Trading with Binance may not be straightforward for Malaysians. Binance recently added a slew of eWallets to their list of supported payment options for peer-to-peer transactions, including GrabPay, Touch ‘n Go eWallet and ShopeePay. But soon after, Grab started prohibiting transactions to the platform, while reminding users that transactions to unauthorised or unlicensed platforms are not allowed.
The SC could also make it harder for Malaysians to access the platform. Recently, it blocked access to Remitano, another popular cryptocurrency platform that was on its alert list for operating without a license. Investors were urged to withdraw all their holdings. You currently can’t access Remitano unless you change your DNS settings or connect through a VPN.
What other options are there?
If you want to play it safe, consider investing via SC-approved cryptocurrency exchanges. Currently, that means three platforms: Luno, SINEGY and Tokenize. They don’t offer the huge range of coins on Binance, or the extra features like being able to stake your tokens, but they are regulated in Malaysia. In the event of some sort of dispute, you’d have a better chance of being able to resolve it through official channels.