In case you missed it, the decentralized exchange subsidiary of leading cryptocurrency exchange Binance announced at the weekend that the platform would geo-block access to users from the United States as well as 28 other countries.
That announcement sparked a lot of comments from the crypto community as one would expect, with many noting that the restriction indeed betrays the ‘decentralized’ tag place on the platform by Binance.
However, a closer look shows that Binance’s decision to geo-block users from these countries has to do with regulatory issues rather than a deliberate attempt to restrict the adoption of its decentralized exchange.
Countries Geo-Blocked From Binance DEX
USA, Albania, Belarus, Bosnia, Burma, Central African Republic, Democratic Republic of Congo, Democratic People’s Republic of Korea, Cote D’Ivoire, the Crimea region of Ukraine, Croatia, Cuba, Herzegovina, Iran, Iraq, Kosovo, Lebanon, Liberia, Libya, Macedonia, Moldova, Serbia, Somalia, Sudan, South Sudan, Syria, Venezuela, Yemen, or Zimbabwe.
For one thing, the 30 countries that Binance has geo-blocked from its decentralized exchange are jurisdictions where regulators either show a negative stance toward cryptocurrencies or entirely banned citizens from using them.
To be more specific, more than one-third (11) of the blacklisted countries are in Africa, a region where the government still consider cryptocurrencies as either a dubious business or pyramid scheme.
The case involving the U.S is even more apparent with the Securities and Exchanges Commission (SEC) seemingly looking for any chance to pounce on any move that breaches its 72-year-old security framework.
The core feature of a decentralized exchange is keeping user data anonymous and consigned to the external wallet they use to trade, by removing the Know-Your-Customer (KYC) procedure that many regulators impose on centralized exchanges.
Therefore, instead of breaching any of these laws and facing fines from these jurisdictions, Binance’s decision to geo-block users from these regions is a sign that their regulatory compliance team has done an excellent job.
Users Can Access Binance DEX Despite Geo-Block
Even an internet rookie understands that geo-blocking does not stop an individual from visiting any website since they can easily install a Virtual Private Network (VPN) extension to pass by the restrictions.
Such an approach also works for Binance DEX, meaning that users can get on the platform using a VPN that grants them access to an IP address from one of the countries that can legally access the exchange.
In the end, the geo-blocking will mean hat Binance DEX’s adoption will take more time than it should, thus, highlighting the fact that a lack of precise regulation remains one of the most significant barriers to the mainstream adoption of cryptocurrencies and its products.