Last summer, Binance, the largest digital asset exchange in the world, announced a partnership with “BAM Trading Services” to launch crypto trading services for users in the United States. That same week, Binance updated its terms of service to exclude “any U.S. person.”
“If you have an account on Binance.com, you cannot log into your account through Binance.US because these are considered two separate exchanges. With the establishment of Binance.US, our firm must submit and comply with all applicable federal laws and regulations. Therefore, each platform is considered different and require separate account registration processes.”
Compliance in the US is rather convoluted, and rigorous, as there are both state and national regulatory demands. Today, Binance.US operates across much of the country with the exception of 12 individual states where the exchange has yet to be licensed.
The move was clearly part of an ongoing strategy of adapting to a regulatory environment where compliance with national law is paramount – especially AML/KYC rules. Binance.US was soon registered with FinCEN but the tech stack was said to be effectively the same as its sibling. The FATF Travel Rule is being rolled out now.
In September 2019, Binance.US began accepting account registration and as well as accepting deposits of BTC, ETH, XRP, BCH, LTC, and USDT. Since September, Binance.US has continued to offer additional features and services including an OTC Market and staking while boosting its compliance regime.
On a global basis, Binance appears to be seeking global domination when it comes to the digital asset ecosystem. The recent purchase of CoinMarketCap, for a mere $400 million, foreshadows a grander ambition where Binance strives to provide a full stack of digital asset services, including trading, to anyone anywhere.
Regarding Binance.US, this digital asset exchange faces some well-established platforms like Coinbase – an operation that has a solid pipe to federal and state regulators as well as solid domestic mind-share.
But even while Binance.US is battling the competition, the opportunity remains as only about 6 percent of US investors own Bitcoin. Binance.US believes that around 200 million people have written off Bitcoin “before they’ve even given it a chance.”
To help encourage crypto investors in the US, Binance.US recently touted lower fees and cashback opportunities in the different states where the exchange currently operates. This week, trading fees were cut in half to “celebrate” the Bitcoin halving.
To help guide the exchange in a competitive market, Binance.US hired Catherine Coley as CEO to lead the North American operation. Cole was previously at Ripple where she was Head of XRP Institutional Liquidity. She has also completed stints at both Morgan Stanley and Silicon Valley Bank – so she has the tool kit to understand both old finance and new.
Recently, Crowdfund Insider connected with Coley. Our discussion is shared below.
Since launch, what type of utilization and volume is Binance.US seeing?
Catherine Coley: While we aren’t sharing ‘user numbers,’ as there’s no consistent way to track them across app and desktop interface, I can tell you that in the last three months alone, we’ve tripled our number of users. Our number of active users is also growing steadily, though of course trading frequency, be it daily or weekly, depends on individual preference.
The US market is highly competitive with well established digital asset exchanges. How will Binance.US compete with the likes of Coinbase etc.?
Catherine Coley: In addition to offering the speed and efficiency of the technology that built Binance, we also charge the lowest fees of any US exchange. We’re aiming to be a truly accessible exchange, one that anybody can use. We want to make sure we’re listening to our customers and providing them with the features they’re looking for in their exchange.
Huobi tried and left. Thoughts on that?
Catherine Coley: Binance US hasn’t left – and doesn’t plan to.
The regulatory environment in the US is very strict and pretty convoluted. How has Binance.US managed compliance? How is your pipeline with all of the regulators?
Catherine Coley: Binance.US works hand-in-hand with regulators and believes that regulatory compliance will push innovation further, as we move towards mass adoption.
Custody is via Prime Trust – what about your banking relationship?
Catherine Coley: All USD deposits made at Binance.US are held in pooled custodial accounts at multiple banks, which are insured by the FDIC. We maintain them in a manner that provides access to pass-through FDIC insurance coverage up to the current depositor coverage limit, which is $250,000. FDIC insurance coverage protects depositors against the risk of loss in the event that an FDIC-insured bank fails.
Is Binance.US available in all US states?
Catherine Coley: Binance.US is currently available in 37 states, but I’ve made it my personal goal to be in every state by the end of 2020.
What about liquidity? Does the US benefit from its affiliation with Binance?
Catherine Coley: As far as liquidity, no. We are two separate entities. We utilize the technology from Binance.com but our platforms are separate and operate differently according to local regulations.
As for digital assets and pairs, when will you be adding more? What about digital securities – is that on your roadmap?
Catherine Coley: There is plenty of work for us to do in digital assets. Plenty more to do while other aspects of the industry mature.
Binance.US already offers staking. What other features will be made available going forward?
Catherine Coley: As of this week, Binance.US is offering .25% cashback on crypto purchases made in USD. We’re also offering staking rewards to users buying XTZ, and have more in the pipeline.