Binance Korea, can anticipation lead to disappointment?
[Onepick news] Binance landed in Korea on April 6 with the establishment of Binance KR. The news is alarming for the domestic exchange market, which at the moment is largely divided between Upbit and Bithumb. From the point of view of the users, Binance’s launch is convenient in that it enables them to trade with the Korean won. But for Binance: What are its chances of success in the domestic crypto industry? And what are its limits? #Difference between Binance vs. Binance KR Binance KR is a crypto exchange established by Binance Limited, a Korean company. It is not an overseas office established directly by the service’s global headquarters. Binance KR was established by Kang Ji-ho, the founder of BXB, which issues the KRWb stable coin, which is backed by Korean won deposits. According to Binance CEO Changpeng Zhao, Binance KR uses “Binance Cloud” technology and the company’s name. The relation between the two is closer to franchise-franchisee. Binance KR currently has 30 or so staff, including software developers and operation staff. When a company offers an externally-sourced service as their own, we call it “white labeling.” Referring to itself as a franchise business, Binance KR is not a regional office directly operated by headquarters but one of the franchise’s many branches. According to Zhao, Binance Cloud offers functions like spot trading, peer-to-peer trading and initial offerings of new coins—all of which are also possible at Binance. The biggest advantage of Binance KR however is that users can deposit Korean won. But it’s not that users can use Korean won to purchase coins as with domestic exchanges. Once a user deposits won in Binance KR’s corporate account, they receive KRWb stable coins with, which users can trade cryptocurrency on the website. #Binance KR and KRb—is the model clear of legal issues? The service has its strengths, but there are several points that need to be clarified. Binance KR is not approved under the specified financial transaction information. It does not utilize identity-verified bank accounts from commercial banks and does not have an Information Security Management System certificate issued by the state-owned Korea Internet & Security Agency. The company says it is preparing to meet these conditions, but completion is unlikely to happen in the near future considering it takes six months to obtain the ISMS alone. This explains why Binance KR is asking users to first deposit Korean won to their corporate account for exchange into stable coins. “At the moment, even exchanges that did receive the ISMS are not able to receive identity-verified bank accounts,” said Kang Ji-ho. “If we have to choose between not doing business at all or using a corporate bank account, going for the latter is not circumventing regulations and our only option.” Using stable coins can also be an obstacle. Initial coin offerings have to follow strict regulations in Korea, but there are no specific rules for stable coins. This is why domestic exchanges rarely issue them.