[First published on 6 September 2021 and updated on 17 October 2021]
The global regulator crackdown against Binance continues, with the Monetary Authority of Singapore (“MAS”) being the latest to take action against the cryptocurrency exchange. On 2 September 2021, Binance was placed by MAS on its Investor Alert List as an entity which “may have been wrongly perceived as being licensed or regulated by MAS”, and was subsequently told to stop providing payment services to Singapore residents.
This followed actions by other regulators around the world in recent months, including those in the U.K., South Africa, Japan, Malaysia, Thailand, and the Cayman Islands.
Given the latest developments, how will Binance users in Singapore be affected, and what preparations should users have in mind?
Binance vs Binance Singapore
Binance operates globally via binance.com, with its corporate entity being Binance Holdings Ltd. In certain jurisdictions it has set up local companies, and it operates in Singapore via binance.sg, registered under Binance Asia Services Pte Ltd. This article will refer to the former as Binance, and the latter as Binance SG.
It is unclear where Binance itself is registered. A common response issued to regulators appears to be that it is not based anywhere. CEO Changpeng Zhao (“CZ”) has stated that “[w]e don’t have a headquarters, and a lot of regulators scratch their heads”. In this context, authorities understandably have some difficulty taking action against the exchange — how do you subject such an entity to the full force of your local laws? In places where Binance’s local affiliates exist, however, the exchange has to some extent been playing ball.
Licensing and MAS
In Singapore, the Payment Services Act requires cryptocurrency exchanges to be licenced as they fall under the definition of payment service providers (specifically, as digital payment token service providers). Binance SG is currently operating under an MAS exemption — it has applied for such a licence and its application is still under review.
Binance on the other hand, has not, and may according to MAS “be in breach of the Payment Services Act for carrying on the business of providing payment services to, and soliciting such business from Singapore residents without an appropriate licence”. Accordingly, MAS expects Binance SG to “immediately begin an orderly suspension of its facilitation of transfers of digital payment token assets between [Binance SG] and Binance”.
Impacts on Singapore users and Binance’s reaction so far
Being the largest cryptocurrency exchange worldwide, it is no surprise that many cryptocurrency investors and traders in Singapore use Binance. Whilst binance.sg exists, its features are extremely limited compared to binance.com.
For example, only 8 cryptocurrencies are offered on binance.sg, whilst the current count for binance.com stands at over 500. binance.sg operates as a fiat-to-crypto exchange only, whilst Binance offers trading, crypto-to-crypto transactions, and an expansive array of trading pairs. Further, binance.com also offers a range of interest-earning and staking services, which unfortunately are absent from binance.sg.
Over the weekend, Binance has already announced that it would cease SGD trading pairs, SGD payment options, and remove its app from the Singapore iOs and Google Play stores on 10 September 2021. In a series of tweets, CZ has also reiterated this (whilst emphasizing Binance does not operate in Singapore), asked Singapore users to use binance.sg, and most critically, warned that there may be more restrictions on Singapore users.
With the upcoming changes, funding of Binance accounts would certainly be less convenient (if at all possible in the near future), particularly since straightforward P2P transactions to purchase stablecoins appear to be coming to an end.
At the time of writing, Singapore users can still access their Binance accounts and utilize all features (though SGD trading pairs and SGD P2P trades will soon end). It remains to be seen if binance.com will eventually be geo-blocked for Singapore IP addresses, whether by the authorities or even by Binance itself.
What next?
If Singapore users will not be able to access binance.com in future, trading will have to take place on other platforms, and arrangements certainly need to be made for assets to be transferred out, whether to binance.sg, other exchanges, cold wallets, coins’ respective chains (for staking if applicable), or elsewhere. If greater restrictions are imposed by the authorities, CZ has confirmed that there will be a grace period to manage orders and positions, as well as to process withdrawals. Users who have locked up assets on the exchange (e.g. staked ETH for ETH 2.0) will certainly hope such assets can be moved as well, though clarity is still awaited.
Should Singapore users still be able to access binance.com and only be subject to the changes in the aforementioned announcement by Binance, there would presumably be more relief, since users would only need to navigate funding issues. P2P purchases using SGD will no longer be available. We may also see possible ceasing of transfer services by banks in Singapore if MAS orders them to do so (whether through SWIFT or credit card). Moving forward, users may perhaps have to look at funding their accounts on other exchanges before transferring cryptocurrency to their Binance accounts.
Close attention will need to be paid as the situation develops in the coming days and weeks. For now, the silver lining amidst the FUD is that binance.com has not been outrightly banned, and Singapore users can continue to use most of its features. It is also worth noting that the Singaporean authorities have shown an overall positive attitude towards cryptocurrency. Still, this recent move by MAS (and other regulators across the globe) highlights the reality that the cryptocurrency world, which aims to operate in a decentralized manner, is still very much subject to centralization in the form of national rules and regulations (broadly discussed in this other article on decentralization in cryptocurrency). From a regulatory perspective, clearer frameworks may perhaps be beneficial for an industry evolving at breakneck speed.
*October 2021 Update*
Further to the 5 September 2021 announcement, Binance has updated that by 26 October 2021, Singapore users will no longer be able to make fiat deposits, engage in spot trading, and purchase cryptocurrencies through fiat channels and through liquid swapping.
The announcement is silent on the trading of futures, though some users have been advised by customer support that this will no longer be available as well. There is also no express mention of whether users can continue to hold their current assets on Binance, though there is reference to redemption of tokens by the October deadline above.
For peace of mind, Singapore users may wish to transfer all assets on Binance elsewhere. Binance SG may be a viable option if holdings are supported there. Otherwise, Huobi and FTX appear to be popular exchange alternatives. Further options include holding assets on platforms such as Hodlnaut or Celsius to earn interest.
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Disclaimer: Contents of this article are the author’s personal views on the subject. This article does not constitute professional, financial, or any other form of advice, and should not be construed as the same.