I am certain that the majority of the readers of this article will try hard to find any relevance between the The Shawshank Redemption a well-known American film based on the 1982 Stephen King novella Rita Hayworth and Shawshank Redemption and the latest announcement of Binance with title Auto-redemption of existing subscription products.
According to Wikipedia and for those who are unaware, The Shawshank Redemption, tells the story of banker, who is sentenced to life for the murders of his wife and her lover despite his honest innocence. Therefore, for the next two decades, he manages to befriend a fellow prisoner, contraband smuggler "Red", he becomes instrumental in the money laundering operation led by the prison governor and in the end he succeds to dig a tunnel from his cell to the outside world, earning his freedom while reporting the prison governor for his financial wrongdoings in the local press.
From the other hand, the recent email/article from Binance informed its customers residing in the United Kingdom that all earning products of the platform such as Liquidity Farming, Flexible Simple Earn, Flexible DeFi staking, BNB Vault, Locked Simple Earn and Fixed DeFi-staking will be suspended until the end of April and after that all the funds invested on these earning products will be simply automatically REDEEMED to the SPOT wallet without the possibility earning any further interest from them.
How did we end up here?
The whole situation started long time ago but it passed without special notice of the then bullish crypto industry although there were several announcements on the British and International Press. In fact, on 25th June 2021 the UK financial watchdog has ordered Binance to stop all regulated activity and issued a warning to consumers about the platform, which is coming under growing scrutiny globally and especially in the USA. Guardian published a relevant article on 27th June 2021 with title "UK financial watchdog cracks down on cryptocurrency exchange Binance" and Independent published another article on 28th June 2021 with title "Binance banned in the UK: what does it mean for cryptocurrency traders and prices?". CNBC commented that "Binance, the world’s largest cryptocurrency exchange, gets banned by UK regulator", BankingDive also commented that "British regulator warns Binance to halt UK activity" and Reuters finally commented that "Britain bans Binance's UK ops in latest cryptocurrency crackdown".
Even Binance also made a brief statement on the Twitter account about the announcement, stating that Binance UK (Binance Markets Limited - BML) is a separate entity from Binance therefore nobody should worry. And indeed nobody ever took it seriously and everyone seemed to continue "investing" in Binance's Earn products for the next 1,5 year without problems as all UK-based Binance customers should have experienced.
The first main reaction of Binance towards the regulation reform came two months later on 20/08/2021 with an annoucenment on Binance blog with title "Important Changes About Binance Identity Verification" requesting existing global users to complete the Intermediate Verification otherwise their account permissions temporarily will be changed to “Withdraw Only” status, with services limited to withdrawal, order cancellation, position close, and redemption. And the deadline for the verification was the 19/10/2021. Please note the date.
Interestingly, few months later on December 2021, Binance made another announcement on Binance blog with title "Why Do I Need to Re-verify My Binance Account (EEA Countries)" requesting customers from EEA Countries to re-verify their accounts for a fully alignement with the EU Anti-Money Laundering Directive. And for those who don't know, EEA countries are more and less ALL the countries of the European continent plus Turkey but since BREXIT, NOT the United Kingdom!
My personal Experience
Although the notification post from Binance for an Intermediate Verification of all crypto-users providing a Proof of their Address was published on 20/08/2021 and the deadline for the verification was due to expire on 19/10/2021, it wasn't until one whole year after on October 2022, that I received a personal notification from Binance requesting to re-verify my account to Intermediate Verification, in order to avoid limiting my account to "Withdrawal only" status! Yet, I had already passed with success the initial KYC verification when i first registered in the platform several months ago!
The verification process was completed on the early November, the same period with the FTX collapse following a report by CoinDesk highlighting potential leverage and solvency concerns involving FTX-affiliated trading firm Alameda Research. Although I knew that CZ plans were to comply with the financial regulators and tax services aka the financial establishment and I was aware that by verifying my residential address on the Binance system I put myself into a regulated status, I continued to withdraw my earnings from my crypto-activities into my Binance account to continue taking advantage of the accumulating interest. After all, I have never been expected to gain any profit from crypto-trading since my crypto-trading skills are still very poor so I wasn't worried about any crypto-trading profits taxation because i never had any! Therefore, I believed that my investments in Binance Earn are also safe from any kind of taxation or danger.
Yet, quite suddenly and without previous warnings, on February 2023, I noticed multiple notifications from my Binance app about the redemption of some of my locked staked products into my SPOT Wallet. Indeed, I remembered that I had deactivated the auto-subscribe button of several staked chunks of my BTTC that were due to expire in order to collect them into a nice big batch ready to re-stake it again.
Then my staked chunks of ADA and FET were sudenly redeemed into my SPOT account but when i tried to re-stake them I received a message that the feature isn't available in my region due to compliance with local regulations!
Then i realised that even the "subscription" option that would allow me to auto-subscribe aka auto-invest any daily earned interest back to my flexible earning accounts wasn't working either. A quick web search would have made me realise that the "bug" wasn't only limited to my account but it was something larger as a relevant reddit channel emerged with title "Staking on Binance not permitted in the UK" stating the reality of the situation but there was no official explanation or statement from Binance about this.
I also remembered an article from CZ back on July 2022 on Binance blog with title "CZ FAQ 5 - Why Binance Embraces Regulations" where CZ was trying to give a glimpse of his future plans i.e. complying with the established regulation. Alas! that explains a lot and it meant the end of the flexible and staking products in Binance. At least I was optimistic that I could keep my Binance Liquidity Farming earning products farming commision on a daily basis without the hassle of gas and network fees of the DeFi platforms. Although their performance was rather negative following the previous bearish trading period, I was still earning a respectful amount from the daily farming operations of my liquidity there in several liquidity pairs that I had decided in the past to invest. Yet, the latest announcement, ends all of my hopes since by the end of March 2023, my liquidity funds will be returned back to my SPOT account without permitting me to earn further profit form my liquidity farms.
Since I have been a fanatic supporter of Binance "earning" products, the word "REDEMPTION" stood like a huge shock, awe and dissapointment for my crypto-investments in the platform, relevant to the shock, awe and disappointment of the Prison's governor when he realised the escape tunnel on the ex-banker's cell and even greater when the police came to arrest him for all of his financial wrongdoings during the previous years.
For the past 3 years when I registered an account with Binance, I became a fierce supporter and user of Binance Earn products either by investing my personal FIAT funds or by depositing into my Binance account all the cryptoprofits from my engagements with crypto earning opportunities that can be found in my cryptosite "www.cryptomonkey.weebly.com". My profits from Crypto Faucets, GPT, PTC, Gaming platforms that i keep using or even my profits from my articles that are posted on Publish0x, soon or later would have been withdrawn into my Binance account to make use of its "earning" products accumulating profits day by day, month by month, year by year from the interest earned there. In one of my first articles in Publish0x, with title "My response why Binance Staking is NOT a SCAM" I even expressed my disagreement with the article with title "E&S Special Edition: Binance Staking Could Be a SCAM?!" by [MikeZillo] claiming that Binance Staking is a scam
Yes i still believe that Binance Staking isn't a scum but unfortunately it is obvious that Binance decided to comply with the local UK banking regulation and become part of the same system that Satoshi Nakamoto wanted to fight with his Bitcoin invention. After all, Binance is just another limited company of the current establishment and therefore it has no other option than to comply in order to continue to preserve its existence. The problem with Binance and its owner and CEO CZ isn't that Binance is trying to comply with the established regulation but the fact that Binance's main operation is the trading and investing of products that have been designed and emerged (by Satoshi Nakamoto) to be and remain UNREGULATED!
Good News Coming Soon ?
The HOPE came few days ago when several articles on COINDESK that has been also re-published on Binance blog, Cointelegtaph, Yahoo Finance and BusinessInsider stating that the Bank of England Prudential Regulation Authority (PRA), which is the UK banking regulator, is expected to propose rules on Issuing and Holding cryptocurrency in accordance of the BASEL III Committee and the Financial Services and Markets bill that is being discussed on the UK Parliament. The news came after an announcement of the PRA executive director Vicky Saporta.
Is there any mitigation coming soon for Binance Earn products that would eventually include taxation on the staking cryptoprofits or the UK-based Binance customers should move their funds to other CeFi or DeFi crypto-platforms offering relevant Staking products but also the expense of network and gas fees in every transaction ?
***Disclaimer: All information found on this article is for informational purposes only. I do not provide any personal investment advice so please make your own research before proceeding to any investment/trading action.***
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