Are you worried about giving over highly personalized information like your driver’s license, SSN, and a picture of yourself to a crypto exchange? Does it feel like you’re being frisked by airport security? Don’t worry- you’re not alone. The ‘Know-Your-Customer’ (KYC) process in crypto isn’t a great experience for users- but it’s a necessary evil to be able to play ball on a regulated crypto exchange.
Although firms like Coinbase, Binance, and Gemini are working overtime to make the crypto space more welcoming to newcomers, it’s still shaky on the security front and has a long way to go to make crypto easily understandable. The security uneasiness and lack of understandability are the two largest things holding the crypto asset class back. Don’t get me started- there’s a lot of other stuff too like Ethereum gas fees and centralization, but security and ease of use are at the top of the list.
Is it safe to give Binance.us my SSN?
Yes- as safe or safer than it would be giving your Social Security Number to a bank, or putting it on an apartment lease application, or on a student loan application. Binance.us protects your account information. Account hacks on Binance are extremely rare because Binance requires two factor authentication. As an exchange, Binance.us has yet to be hacked (knock on wood). Binance.com (its parent company), however, has been hacked more than once. Even when these exchanges are hacked, hackers aren’t looking for people’s personal info- they’re trying to steal coins from the exchange. Banks and big financial institutions experience big cybersecurity attacks almost daily.
Why is Binance requiring this?
In life, three things are certain: death, taxes, and the fact that you’re going to lose socks when doing laundry (WTF? where did they go?) The US government wants to prevent tax fraud and money laundering at all costs. Unfortunately in the crypto space there are an extremely small number of bad actors that use crypto as a means to finance vice (trafficking, money laundering, etc.) This number is actually smaller in crypto than it is with actual fiat currency like the US dollar, where considerable amounts are held by drug dealers and world dictators worldwide (did you know 75%+ of all US dollars exist outside of the US?) The US dollar is the world’s reserve currency- just like cigarettes in prison (sort of).
Binance.us likely reports giant gains and losses of some of its most fortunate/unfortunate users to the IRS to make sure these big winners are declaring the capital gains on their tax returns. How does the IRS match tax refunds with the data Binance.us gives it? Bingo. The Social Security Number. Your SSN is safe with Binance, and the government isn’t trying to collect data on your because you’re a crypto trader or anything like that. They just want to make sure that they’re receiving the capital gains tax on any crypto gains you make. At the end of each year, Binance.us will provide you with a tax form outlining your gains or losses. If you’ve lost money, you can write up to $3,000 of those losses off as capital losses and save on your taxes. So maybe buying high and selling low isn’t all bad 🙂
The Binance.us verification process
Binance uses KYC when you’re onboarding. Depending on its available bandwidth (with its employees), Binance can verify your account in as little as 30 minutes or take as long as a month. My guess is that someone has to individually verify your information before they give you the green light to trade.
Depending on the daily withdrawal limit you want, you can choose to leave it at basic verification (up to $5,000/day) or continue with more verification to get to advanced (up to $1,000,000/day). When I did my verification, it unfortunately took a few weeks. I did the basic level- I’m definitely not planning on needing more than a $5k/day withdrawal limit anytime soon. Thankfully while I was waiting for verification, the crypto market crashed a good bit, so I saved money that I would’ve ended up losing.
Despite some drawbacks, Binance.us gets a few of the big important things right.
For starters, Binance’s 0.1 percent trading charge is cheaper than that of several other American exchanges. Coinbase and Gemini have fees on trades that are 5 to 15 times as much.
Second, Binance is well-known for its lightning-fast trade execution. Changpeng Zhao, the company’s creator, built a software system for matching orders for high-speed traders before launching Binance in China in 2017. So when you pull the trigger on a trade, you can expect quick results. This is more important for crypto day traders.
Lastly, while it doesn’t have as many cryptocurrencies or crypto-to-crypto trading pairs as its parent firm, Binance.US still has a larger assortment of over 60 cryptocurrencies than many other U.S. exchanges.
And one more thing: Binance.US is a fully-regulated institution in the US and is backed by the FDIC. The FDIC insures all cash deposits into accounts up to $250,000.
Keep in mind that Binance.US isn’t available in 6 US states: Hawaii, Idaho, Louisiana, New York, Texas, and Vermont. Could you pick a more random smattering of states? I don’t think so. My guess is that Binance is working overtime with the governments of these states to become available to more customers and grow its business. New York will be the biggest hurdle because it requires a ‘BitLicense’- something that has quite a bit of red tape and process, reportedly.
Binance as a whole has run into several regulatory issues worldwide- including being run out of Its native China since the year it started (2017). In 2021, Binance was banned from the UK. While this doesn’t inspire confidence, I consider it a plus that Binance.us is a separate entity that’s already been jumping through US regulatory hoops.
What’s the difference between Binance and Binance.us? [A recap]
Binance is a global firm that allows for margin trading and has hundreds of exotic altcoins. Binance.us, on the other hand, only allows crypto-to-crypto trading and is only available in the US. Binance.US ‘only’ has 60 or so trading pairs.
Binance is much larger than Binance.us and has been around since 2017, while Binance.us launched in 2019.
Binance has had several regulatory issues globally, while Binance.us is a fully regulated US institution with FDIC insurance on deposits up to $250,000.
If you’re looking for a lot of exotic altcoins, Binance.us probably isn’t going to be your jam. It’s a little more risk, but KuCoin has hundreds of altcoins, the ability to short cryptos, and use leverage (which is the definition of insanity in crypto).
I’m gonna sound like your parents here, but be safe. Think long and hard before making any decision. Never give away your seed phrase or password to anyone. Binance, MetaMask and others will never give you any emails asking for your seed phrases for ‘updates’. I still don’t even trust real customer service reps from these platforms when I interact with them. Double and triple check the first and last five digits of every crypto address you send your cryptocurrency. Godspeed!