Common Questions About the Binance Ban

CRYPTODAY 129

1. “So what actually happened??”
   For people who are just catching up here’s a quick timeline. On Nov 21, the US DOJ indicated that they were getting close to a settlement with Binance, and it would likely involve a penalty of $4.3B. The following day, we all woke up to the news that CZ would be stepping down as part of that resolution, and handing over the CEO reins to Richard Teng. The market reaction was significant but not superlative; after a brief dip, we are now in a stronger position than when this whole hubbub started. (Well, except for the BNB token.) The following week, on Nov 28, the Philippine SEC published an advisory stating that Binance was selling unregistered securities in the Philippines, and further stated that anyone caught acting as dealers or promoters of Binance services could be fined up to 5M pesos. The next day, the SEC followed up by explaining their enforcement plan: they has requested that the NTC block access to Binance in the Philippines within the next 3 months.

2. “So Binance is really going to be blocked here?”
   The most important thing to bear in mind about this whole situation is that it is still developing. If we take everything that was said by the SEC at face value, then yes, it does look like Binance’s website and app will be blocked here in the Philippines beginning in late February 2024. How would they do it? Since the NTC is the agency that permits our ISPs to operate, they can also force them to blacklist certain websites. Anyone relying on PLDT, Globe, Converge, Starlink, etc for their internet service would thus not be able to access those websites. This kind of enforcement action is not without precedent: according to their own list of “restricted countries,” Binance is also blocked in Malaysia, the Netherlands, Canada, and the US. I’ve had a few friends mention that the site was also inaccessible in Hong Kong and Vietnam, but I’ve been unable to verify that for myself.

3. “Can’t I just use a VPN to get around this ban?”
   The most common community response is that we could all just use VPNs to circumvent this ban. However, Binance’s own terms & conditions specifically prohibits the use of VPNs to circumvent geographical restrictions … although it doesn’t mention what they’ll do if they catch you using one. It’s also not clear how closely Binance follows their own T&Cs. You may recall that one of the key findings in their US DOJ case was that they were actively encouraging their American users to employ VPNs so that they could circumvent the US ban. My sense is that they were taught a $4B lesson that that wasn’t a great idea.

4. “So we’ll all move to Bybit/OKX/Kucoin instead?”
   The second most common community response is to just transfer all their funds and coins to one of the other big international exchanges. It’s not clear whether the SEC will pursue these other platforms, but SEC Commissioner Kelvin Lee in an interview referred to “unregistered” exchanges as their target. It’s impossible to say how extensive that final list will actually be — there are hundreds of unregistered exchanges accessible from the Philippines — but so far Binance and OctaFX (a stock trading platform) are the only two notable names. Based on Lee’s public statements however, there does seem to be a possibility that these other exchanges would eventually get blocked as well.

5. “Why don’t Binance or any of these other platforms just get licenses?”
   The specific license that these exchanges need in order to operate here is called the Virtual Asset Service Provider license (VASP), and it’s issued by the BSP. However, the license issuance has been paused until December 2025, so the only way for anyone to obtain a license is to buy one of the companies that already have it. This is easier said than done, because the majority of the original 19 license-holders are no longer operational and likely don’t even have the staff to work on a complicated acquisition process. Additionally, the BSP has to approve the acquisition, which adds another level of difficulty if you are a business like Binance that has been in regulatory hot water for years.

6. “The government is anti-innovation! They’re trying to kill crypto in the Philippines!”
   If you believe the government is anti-innovation then you should also acknowledge that Binance is anti-regulation. After all, they entered the Philippine market without proper licensing and marketed their services to Filipinos while knowing it was against the law. But the truth of the matter is, Binance isn’t against regulation any more than the government is against innovation. They both just happen to be motivated by different things — Binance, by business success, and the SEC, by customer safety and local laws. Unfortunately those motivations were on a collision course from the very beginning.

7. At the heart of this controversy is the fact that cryptocurrencies are borderless technologies that benefit from *global* access. They get better as more people use them. Unfortunately, those people live in different countries with legal frameworks that are purely *local*, so there exists an inherent incompatibility. For as long as nation-states want to govern themselves in their own respective ways, these messy situations will continue to arise. I’m certainly not advocating for a one-world-government, so I think we will just have to live with these trade-offs.

8. “These policies are just favoring the local exchanges!”
   Given my affiliation with GCash, my response to this would not be unbiased, so I’ll keep this short. With Binance’s exit now imminent, local exchanges have very big shoes to fill and a lot of improvements to make in order to present themselves as viable alternatives. It’s a big opportunity and also a great responsibility. What we’re hoping for is that the Filipino crypto community can give us a chance and work with us to grow the products that they actually want to use. We’re here, and we’re listening to your feedback.

   Stay safe out there, cryptofam!