Binance, one of the world’s leading cryptocurrency exchanges, announced today that it will move its South African derivatives operations to its Bahrain subsidiary, Binance Bahrain B.S.C. (c) .
This unexpected move by Binance is in line with the regulatory frameworks of South Africa and Bahrain, ensuring continued compliance and service delivery in both countries.
South African users who wish to continue trading derivatives on Binance will now have to register new accounts with Binance Bahrain and undergo a new Know-Your-Customer (KYC) process. These are new standards set by the Central Bank of Bahrain.
South African users must re-register with Binance Bahrain
The decision to migrate South African derivatives operations to Binance Bahrain comes in response to the growing need for regulatory alignment, given the increasing scrutiny from financial authorities around the world.
Binance Bahrain will now serve as the official derivatives product manager for South Africans, in effect becoming the legal representative of FiveWest OTC Desk (Pty).
South African users of the Binance derivatives platform will need to set up new accounts with Binance Bahrain, accept the new terms of use and resubmit all necessary KYC documentation.
While potentially cumbersome for users, this process is seen as necessary for Binance to comply with international standards and operate legally in South Africa.
The compliance process is part of Binance’s broader strategy to navigate the complex regulatory requirements imposed by the Central Bank of Bahrain, which has granted Binance Bahrain a Category 4 crypto asset service provider license.
This license not only allows Binance Bahrain to operate a cryptoasset exchange, but also to offer comprehensive depository services, providing users with a secure and compliant trading environment.
Binance grapples with global regulatory challenges
Binance Bahrain’s status as a Category 4 licensed crypto service provider under the Central Bank of Bahrain enables the exchange to provide a full suite of crypto services within a stringent regulatory framework, including exchange operations and depository services.
This setup offers a stable operational base to strengthen its regulatory position despite ongoing challenges in other jurisdictions such as the United States.
Binance recently reintroduced Mastercard payments for cryptocurrency purchases, a service previously suspended due to regulatory challenges in the US, where both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC) have filed multiple charges against the exchange.
As Binance continues to expand its user base – reaching 200 million users and holding $100 billion in user assets in escrow from 2024. – the exchange continues to focus on enhancing operational security and compliance measures.
The 200 million user milestone represents about 36% of the total global cryptocurrency user base.
This significant growth, including the addition of 40 million users in 2023 and 30 million more in the first half of 2024, reflects the exchange’s continued appeal to cryptocurrency enthusiasts around the world.
In addition to regulatory adjustments, Binance is also grappling with legal challenges in other regions. In fact, a recent report indicates that Binance is hiring more than 1,000 new positions, and compliance is the majority.
The upcoming trial of Binance director Tigran Gambaryan in Nigeria coincides with the latest developments in the Binance vs. SEC case in the US.
Tigran, who has been detained in Nigeria since February, filed a new bail application citing medical reasons on Monday. However, his family said lawyers representing Nigeria’s economic crimes agency opposed it.
Commenting, CEO Bianace stressed that Tigran must be allowed to return home for treatment.
It is worth noting that in the context of the ongoing legal battles facing the exchange and its management, this includes the withdrawal of 10 lawyers representing Binance CEO Changpeng “CZ” Zhao and his impending dismissal from the transition center.
