Binance Launches Its First Fiat-Crypto Trading Platform – in Uganda
Cryptocurrency exchange giant Binance announced the launch of a new fiat-crypto trading platform Binance Uganda — that will support the local currency, the shilling. The new platform is significant as it marks Binance’s first foray into the fiat-crypto trading domain. While the African nation has poor banking infrastructure and likely isn’t a big market, the move is interesting due to the number of Chinese companies operating in the region.
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Uganda an Interesting Choice for Crypto-Only Binance
To date, Binance has been a crypto-only trading platform, and is popular due to its large choice of tokens traded, including many from ICOs. The chance to trade those tokens for fiat — any fiat — provides a new opportunity to move digital money off blockchains and back into the traditional financial world.
It will be interesting to see what kind of volumes the new exchange processes. Accounts will be open only to local residents, who will require a Ugandan ID card and have to undergo KYC procedures, as in other jurisdictions. Anyone with local connections could have them convert into shillings, then more easily convert them into other fiat currencies via formal or informal means.
As of June 2018, Binance is the world’s #1 fee-charging exchange by volume, as ranked by Coinmarketcap.
China is the largest foreign investor in Uganda, with its state-owned and private companies pouring $4 billion USD into the country in recent years, according to the Chinese embassy in Kampala.
Certainly some of those wealthy investors could make use of a local crypto to fiat (and vice-versa) trading platform. Whether that’s the main purpose, or merely a fringe benefit, remains to be seen.
Zero-Fee Trading and Free Binance Coins
To onboard new traders, Binance Uganda is offering 0.5 Binance coins (BNB) to the first 20,000 registrants. Additionally, the new exchange will charge zero trading fees for one month from the start of trading on the platform. Binance Uganda has not yet announced the exact date of commencement of trading.
According to a company statement, “As appreciation for the ongoing support from our users, we will provide Binance Uganda users with a month of zero trading fees once trading comes online. The opening of trading will be announced at a later time.”
Two months back, Binance also announced to lend a hand to support Uganda in its economic development.
At the time, Binance CEO Changpeng Zhao tweeted:
@binance will partner with @cryptosavannah @AggieKonde @HelenHaiyu to support Uganda's economic transformation and youth employment through blockchain, embracing the 4th industrial revolution. We will do this by creating thousands of jobs and bringing investments to Uganda.
— CZ (@cz_binance) April 22, 2018
Poor Banking Not a Challenge but an Opportunity
Although Binance’s new crypto fiat venture seems awe-inspiring, it does face a major challenge – Uganda’s poor banking infrastructure. Only 11 percent of the Ugandan population has access to banking services.
However Zhao, often referred to publicly as “CZ”, sees it as an opportunity rather than a challenge. Per CZ, the greater the unbanked population, the easier it is to adopt cryptocurrency as a currency, as reported on China Money Network. The crypto exchange powerhouse is also planning to expand to two or three other locations in the near future.
Failing fiat currencies and high volatility is common among African currencies, and therefore Africans may be more accepting of Bitcoin’s volatility. As for Uganda, the country is also home to the largest remittance market, and that’s where Bitcoin and fellow cryptocurrencies’ wider adoption could come into play.
The question of whether locals, or local Chinese, will make more use of the platform could also be significant as investors look for more ways to convert their cryptos into something they can use widely in the real world.
Will Binance’s fiat-crypto trading gain success in Uganda? Who will use it most? Share your views in the comments section.
Images via Binance, Pixabay