The announcement of Binance ban in Malaysia by the Securities Commission Malaysia on July 30 2021 took the whole crypto community by surprise.
I mean, it shouldn’t have, considering Securities Commission Malaysia did include Binance in the Investor Alert List in July 2020, but no one thought they would actually go through with banning them.
For ‘illegally operating in Malaysia’, Securities Commission Malaysia made three enforcement actions. As per the press release, all Binance entities are ordered to:
Disable the Binance website (www.binance.com) and mobile applications in Malaysia within 14 business days from 26 July 2021;
Immediately cease all media and marketing activities, including circulating, publishing or sending any advertisements and/or other marketing material, whether via emails or otherwise, to Malaysian investors; and
Immediately restrict Malaysian investors from accessing Binance’s Telegram group.
14 business days from 26 July 2021 means the final allowed date for Binance to adhere with all of the enforcement actions is 15 August 2021, thus Binance users in Malaysia can expect to no longer able to access binance.com by 16 August 2021 (or even sooner).
The reaction from Binance Ban in Malaysia
Based on what I see in social media and group discussions, most people reacted negatively to the news.
It was clear that Binance has a significant and loyal user base in Malaysia, who have been using them to get access to more cryptocurrencies than what is allowed in Malaysia, trading platform (with more pairing and better liquidity), P2P trading, derivatives and more. People use them because the range of services is WAY beyond what is offered on licensed exchanges.
However, as pointed out in FintechNews Malaysia, Malaysian regulators aren’t the only ones cracking down or issuing warnings to Binance. Other countries, including the UK, Canada, Japan, Thailand and more are also concerned over the same issues – customer protection, KYC/AML (Know-Your-Customers and Anti Money Laundering) and more.
The good news (? depends on who you ask) is Binance CEO Zhao Changpeng has committed to proactive compliance, so hopefully you’ll see Binance as a licensed entity in Malaysia eventually, which you can’t deny will give users better protection. RinggitPlus have also reported Binance looking for Country Manager in Malaysia.
But until that happens, 16 August 2021 deadline is 16 August 2021 deadline. Binance customers STILL have to do something about their funds in Binance.
Also, even if Binance is licensed in Malaysia, which is unlikely to happen anytime soon (the process to get licensed by Securities Commission Malaysia, I am told, is lengthy), you can probably forget about some services/cryptocurrencies deemed too ‘risky’ for the general public, like futures and memecoins.
So here are 4 options you can take. I will also include which option is most suitable for which crypto user – after all, there are more to us than investors and traders. Do note that you can pick more than 1 option.
#1 – Take out all your funds from Binance, move to licensed exchanges
Suitable for: long-term investors (aka hodlers); some traders
(this is the option Securities Commission Malaysia wants you to take, probably)
If you don’t have an account yet, simply open one, register an account and make the transfers.
Withdrawing funds from Binance
I need to mention something because I see it happening. Please do not be too clever and change the network to ‘save money on fees’.
If you’re withdrawing BTC, then use Bitcoin network (Binance automatically selected it for you anyway). If you’re withdrawing ETH, please use the pre-selected Ethereum network, don’t switch to Binance Smart Chain.
This is important. If you switch chains and withdraw, your funds will NEVER arrive. It’s lost, FOREVER.
EDIT: See comment section on retrieving funds sent on the wrong chain, *if* you control private keys of receiving wallet
Withdrawing other cryptocurrencies
What if you have other cryptocurrencies other than the 5 allowed in Malaysia: Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Litecoin (LTC) and Bitcoin Cash (BCH)? How to withdraw to the licensed digital asset exchanges in Malaysia?
The answer is you can’t, so you have to (1) convert them all to any of the 5 cryptocurrencies above, or (2) Use options 2-4 below.
IMPORTANT: Options 2-4 should be taken with extreme caution. I am not responsible for any mistakes or funds lost. Please do additional research and exercise due diligence before conducting them.
#2 – Take out all your funds from Binance, move to other international exchanges
Suitable for: Other traders
Binance may be banned… but other international exchanges likeKucoin and Huobiare not banned. Yet.
Personally, I have not used them, so I can’t say if they are good or not. I just know they have reputation as fairly reputable trading platforms, so traders looking to trade other pairs aside from the 5 allowed cryptocurrencies in Malaysia can go there.
Of course, by choosing this option, you also understand the risks of using unregulated platforms, including lack of protection.
#3 – Leave your crypto in Binance
Suitable for: Technologically advanced internet users
From online discussions, it was clear that some users are not phased by the Binance ban in Malaysia. They have ways to circumvent it and still access Binance.com after 16 August 2021.
Don’t ask me how. I know the methods in theory, but not in practice. (Use VPN; Change DNS)
(This is assuming Binance doesn’t block everyone who registered with Malaysian ID, which you did during the KYC stage. If they fully cooperate with Securities Commission, they technically can stop you from using the platform, VPN and DNS be damned)
Worth mentioning here: even if you leave your crypto in Binance and can’t access it, the funds will still be in there. You can’t access it but it should be safe there, until you learn how to access it or *if* Binance gets licensed in Malaysia, whichever comes first.
#4 – Use non-custodial crypto wallets
Suitable for: DeFi users, GameFi players, blockchain developers, builders, NFT collectors, hodlers of cryptocurrencies other than the 5 allowed and more. Reminder that not everyone in the crypto world is a mere investor or a trader.
And last but not least, non-custodial wallets. This option is ONLY suitable for people who practice good digital security habits. This is similar to keeping gold in your own safe – the responsibility to safeguard it becomes 100% your own responsibility.
In case that is not clear, I’ll say it again – the responsibility to keep your funds safe is 100% yours. If your funds are stolen/ if you get scammed/ if you make mistakes, there is no way to recover the funds.
So why keep it yourself? The answer is you don’t have to, you can just stick with keeping your funds in regulated exchanges, but this option gives you the most direct ownership over your own assets, and allows you to continue interacting with blockchain platforms and networks. With non-custodial crypto wallets, you can continue gaming (and earning from it), farming, building, collecting, and everything else without limitation.
There are many types of non-custodial wallets, but in here I’ll share three main ones:
(IMPORTANT: For all of them, PLEASE store your passphrase safely and NEVER share it with anyone, not even people who claim to represent ‘support team’ (one type of scam). Use a password manager if you haven’t)
Note: It is IMPORTANT to buy your hardware wallets from the right source as tampered hardware wallet is a type of scam as well.
Hardware wallet is best for hodling and passive safekeeping, rather than active use. If you’re planning to use the wallet often, then…
2) Use Metamask wallet (browser + mobile)
Metamask is a software cryptocurrency wallet used to interact with the Ethereum blockchain. It allows users to access their Ethereum wallet through a browser extension or mobile app, which can then be used to interact with decentralised applications. (Source- Wikipedia)
After you create your account, the default Metamask setting is:
Ethereum Mainnet (store your ETH here)
And a bunch of test networks (for testing purposes)
Matic Mainnet. Here’s how to install Matic Mainnet in Metamask. This allows me to explore Polygon, ‘Ethereum’s Internet of Blockchains’. After all, as a Malaysian I am supportive of the National IR4 Policy, one of which is embracing blockchain technology <3
To learn more about Binance Smart Chain and Matic Mainnet and what you can do with them, please go down the DeFi rabbithole. CoinGecko’s How to DeFi: Beginner and Advanced books is a fantastic place to start and cost only $30. It’s not a bad thing to learn – the career and income opportunities in this space is MASSIVE.
Another wallet compatible with the Ethereum blockchain is Trust Wallet, which has some fundamental differences with MetaMask. For instance, while MetaMask is both a browser and mobile-based wallet, Trust Wallet is only available on mobile.
Additionally, Trust Wallet supports more than just Ethereum and its assets. Users can store a wider range of digital currencies, including ETH, Bitcoin (BTC), Litecoin (LTC), and Ripple (XRP).
Again, there are other types of wallets, and feel free to explore them in your own time, but the ones I shared here are considered must-know.
Which option to take
Go back to #1 and look at ‘Suitable for’ in each section. That should give you an idea of which option(s) to take.
The only other thing to add here is: please be honest with your own knowledge and capability. I have been in the crypto space since Dec 2015 and at one point, was a Certified Bitcoin Professional and still consider myself a 5 out of 10 in the whole scheme of things. I’m still experimenting and learning DeFi, and don’t what I’m doing half the time, so knowing this I only put minimal amounts. I avoid trading altogether.
Lastly, it’s good to try out different things aside from hodling, and yes no risk no reward, but take some time to learn risk minimisation and defensive strategies. Curate the thought leader(s) you’re following, make sure they’re not too binary in their arguments.
Avoid being overconfident and definitely avoid TO THE MOON bros (and sis) shilling memecoins. It’s ok to have them for fun but to be part of the cult? Nah.
What do you think of the Binance ban in Malaysia? What do you plan to do?
Personally, I belong in the camp of ‘Whyyyy Securities Commission Malaysia do that’, but I also get why they had do it: considering relatively low levels of financial literacy in Malaysia, and their role in safeguarding users, it is only fair that they take the steps to protect vulnerable folks and reduce their potential losses.
However, I am concerned of the implications. As mentioned above, not everyone in the crypto community are investors and traders. Niche crypto communities exist, and I fear they may reduce sharing their work or stop altogether – how is that good for development of blockchain industry in Malaysia?
In any case, I am aware that good folks are working together and aiming for the sweet compromise between protection and innovation. Here’s hoping Binance (and other crypto entities) will be welcomed with open arms in Malaysia, supplying not only jobs but opportunities.
I’ll end here, these are my thoughts. What are yours? If you’re a Binance user, what action did you take following the ban? Let us know in the comments!