Binance Co-operating with South African Financial Regulators - to cease leveraged trading options

[Arthur]

There is no such thing as a "local" or "offshore" wallet. All wallets are global.

The reference is not to physical or virtual location but to legal location. Other than the high seas and outer space, all else on earth has a legal location and falls under some or other jurisdiction.

 

[Blackhand]

The reference is not to physical or virtual location but to legal location. Other than the high seas and outer space, all else on earth has a legal location and falls under some or other jurisdiction.

What is the legal definition of the location of a crypto wallet? I would say it is currently undefined.

If we were to try and define it, what would it be?
The owner's country of origin? Wallets don't have owners, just people who know how to access them, potentially from many countries.
Is it the country where a device was used to create the wallet's private key? Impractical, this will often devolve into hearsay.
Is it is the country where local currency was first exchanged and transferred to the wallet. Not all wallets have local currency exchanged into them, are these "orphaned" wallets? Does locality to a country become viral through transfers?

It's a quagmire.

 

[Arthur]

What is the legal definition of the location of a crypto wallet? I would say it is currently undefined.

If we were to try and define it, what would it be?
The owner's country of origin? Wallets don't have owners, just people who know how to access them, potentially from many countries.
Is it the country where a device was used to create the wallet's private key? Impractical, this will often devolve into hearsay.
Is it is the country where local currency was first exchanged and transferred to the wallet. Not all wallets have local currency exchanged into them, are these "orphaned" wallets? Does locality to a country become viral through transfers?

It's a quagmire.

Sadly, in legal actions the state only has to determine whether the asset/security/crypto is legally and/or actually accessible to a local seizure, or not. The world is divided into SA and non-SA, and anything non-SA is illegal without government permission.

If the state issues a seizure or forfeiture order for whatever reason, the question is only: can it execute that order against a person (natural or legal) other than the legal local owner, and so lay its hands on the asset?

If there is no local possessor who can be legally compelled to surrender effective control to the state, then that asset is deemed to have been illegally expatriated, and a new set of laws apply. The state does not have to establish where the asset is, only where it is not. The test is simple: can they go to a local person/entity and gain possession, or not?

As an aside, this is the iniquitous and immoral consequence of governments establishing a legal monopoly over the money supply, which is itself immoral and unjust, in my view.

 

[The Jam]

How does all of this affect dual citizens. Can I not use a VPN and claim to be conducting business as a foreigner?

 

[w1z4rd]

The amount of people Ive seen lose at leveraged trading is huge. Its like cocaine for gamblers. This is not a terrible thing.

 

[Swa]

What is the legal definition of the location of a crypto wallet? I would say it is currently undefined.

If we were to try and define it, what would it be?
The owner's country of origin? Wallets don't have owners, just people who know how to access them, potentially from many countries.
Is it the country where a device was used to create the wallet's private key? Impractical, this will often devolve into hearsay.
Is it is the country where local currency was first exchanged and transferred to the wallet. Not all wallets have local currency exchanged into them, are these "orphaned" wallets? Does locality to a country become viral through transfers?

It's a quagmire.

It's about the jurisdiction of the asset. Transferring to a wallet under your control isn't changing the jurisdiction of the asset. Transferring to an overseas exchange changes the jurisdiction and effectively exports the asset.

 

[Kung Fu Porkchop]

So I'm not sure I understand this. I've only ever purchased crypto currency/coins on Binance and I've never played with margins, future etc. Does this mean that I'll have to move my coins from Binance elsewhere or does this ban not include buying/selling/moving coins?

 

[Snyper564]

So I'm not sure I understand this. I've only ever purchased crypto currency/coins on Binance and I've never played with margins, future etc. Does this mean that I'll have to move my coins from Binance elsewhere or does this ban not include buying/selling/moving coins?

No you fine, they two totally different parts of binance

You actually have to move those coins into the leveraged wallets if you wanted to make use of that side

 

[Arthur]

ITransferring to a wallet under your control isn't changing the jurisdiction of the asset. Transferring to an overseas exchange changes the jurisdiction and effectively exports the asset.

The test is not whether or not the wallet is under your control, it's whether control is under SA jurisdiction.

The same principle applies in the case of regular fiat transactions.

Moving funds from SA to a foreign bank account under your control is a change of jurisdiction. The question of forex allowance doesn't change the principle, as the term "allowance" also indicates, ie it's with government approval, and they can change the allowance and approvals at will. In this case the government approves the expatriation.

The acid test for whether an asset or security is expatriated or not is whether or not the state can serve an attachment order on someone in SA and thereby obtain control of the asset independently of the permission of the (putative) owner.

If it can, then the asset is under SA jurisdiction and deemed as local. If it cannot, then the asset is expatriated and not under SA government jurisdiction.

 

[Kung Fu Porkchop]

No you fine, they two totally different parts of binance

You actually have to move those coins into the leveraged wallets if you wanted to make use of that side

Thanks, much appreciated

 

[Swa]

The test is not whether or not the wallet is under your control, it's whether control is under SA jurisdiction.

The same principle applies in the case of regular fiat transactions.

Moving funds from SA to a foreign bank account under your control is a change of jurisdiction. The question of forex allowance doesn't change the principle, as the term "allowance" also indicates, ie it's with government approval, and they can change the allowance and approvals at will. In this case the government approves the expatriation.

The acid test for whether an asset or security is expatriated or not is whether or not the state can serve an attachment order on someone in SA and thereby obtain control of the asset independently of the permission of the (putative) owner.

If it can, then the asset is under SA jurisdiction and deemed as local. If it cannot, then the asset is expatriated and not under SA government jurisdiction.

The mistake is to assume that you're dealing with something tangible that can have a jurisdiction. So far this has always been ignored for intangible assets as there was a controlling entity but crypto has changed that so the normal rules no longer apply. A bank account is actually not under your control but a third party. There isn't even a tangible asset holding the intangible asset that you can seize. The Roman-Dutch law has worked up till now as it is flexible to cater for cases where the law hasn't made provision but it's reached its limit for the way we live and for technology.

 

[Arthur]

The mistake is to assume that you're dealing with something tangible that can have a jurisdiction. So far this has always been ignored for intangible assets as there was a controlling entity but crypto has changed that so the normal rules no longer apply. A bank account is actually not under your control but a third party. There isn't even a tangible asset holding the intangible asset that you can seize. The Roman-Dutch law has worked up till now as it is flexible to cater for cases where the law hasn't made provision but it's reached its limit for the way we live and for technology.

Not so. Intangible assets have legally existed for centuries - and all are subject to jurisdiction. In ancient times the debate was between intangible assets and intangible rights, certain instances of the latter were valid. Even Talmudic law, which generally regarded intangibles as invalid, recognised certain intangible assets (such as the marriage kethubot). Although ancient Roman Law regarded the sale of intangibles as an emptio spe (like a gamble), certain intangibles such as sales of future agricultural crops were valid at law. Cato writes extensively on this. Modern SA (and Scottish) Roman-Dutch law has long recognised intangible assets in both accounting and contract, and crypto presents no novel legal challenges. SA law amply recognises intangibles, from IP (eg copyright and patent), to goodwill, future liabilities, etc, etc. Remember, too, that banknotes are themselves tokenised (they're not the money, but simply represent a title to money, which is these days nothing, ie intangible).

 

[martin]

The test is not whether or not the wallet is under your control, it's whether control is under SA jurisdiction.

The same principle applies in the case of regular fiat transactions.

Moving funds from SA to a foreign bank account under your control is a change of jurisdiction. The question of forex allowance doesn't change the principle, as the term "allowance" also indicates, ie it's with government approval, and they can change the allowance and approvals at will. In this case the government approves the expatriation.

The acid test for whether an asset or security is expatriated or not is whether or not the state can serve an attachment order on someone in SA and thereby obtain control of the asset independently of the permission of the (putative) owner.

If it can, then the asset is under SA jurisdiction and deemed as local. If it cannot, then the asset is expatriated and not under SA government jurisdiction.

Thanks, this makes a lot of sense but still leaves me unsure about wallets. In my (admittedly very limited) understanding, any person's crypto lives on the blockchain. A 'wallet' is actually just your private key with which you access your crypto. If my understanding is correct, can any country claim jurisdiction over a particular blockchain*?

*Excluding projects like the reserve bank's proposed 'e-rand' where jurisdiction may be less muddy

 

[Arthur]

Thanks, this makes a lot of sense but still leaves me unsure about wallets. In my (admittedly very limited) understanding, any person's crypto lives on the blockchain. A 'wallet' is actually just your private key with which you access your crypto. If my understanding is correct, can any country claim jurisdiction over a particular blockchain*?

*Excluding projects like the reserve bank's proposed 'e-rand' where jurisdiction may be less muddy

Yeah. There's no need for SARB or SARS to define "where" a wallet or blockchain is. As long as a forfeiture order (by a court order, for now) cannot be successfully executed on a person under SA jurisdiction and independently of the current controller of the wallet that asset is deemed to be expatriated and the excon laws kick in. And under excon laws, there's no need to define exactly "where outside SA" the asset is -- all that's needed is to establish that final control is not under SA jurisdiction.

Those who aver that SARB/SARS/overlords don't understand crypto/blockchain/modern technology don't understand the sweeping nature of our monetary laws. The technical and geographic vs virtual arguments matter not a jot.

Even with fiat currency, there's no need to define "where" the bits and bytes are that keep a record of the bank balance, or even "where" the bank balance is, geographically speaking. It really doesn't matter where a bank keeps its servers, where the disks are, or how the network logical topology maps to the "real" analogue world. From Caesar's perspective, all he has to ask is "whom can I compel to give me effective and final control of the asset?" and "can that be done by an SA court order only, or do I have to speak to people outside SA?".

 

[martin]

Yeah. There's no need for SARB or SARS to define "where" a wallet or blockchain is. As long as a forfeiture order (by a court order, for now) cannot be successfully executed on a person under SA jurisdiction and independently of the current controller of the wallet that asset is deemed to be expatriated and the excon laws kick in. And under excon laws, there's no need to define exactly "where outside SA" the asset is -- all that's needed is to establish that final control is not under SA jurisdiction.

Those who aver that SARB/SARS/overlords don't understand crypto/blockchain/modern technology don't understand the sweeping nature of our monetary laws. The technical and geographic vs virtual arguments matter not a jot.

Even with fiat currency, there's no need to define "where" the bits and bytes are that keep a record of the bank balance, or even "where" the bank balance is, geographically speaking. It really doesn't matter where a bank keeps its servers, where the disks are, or how the network logical topology maps to the "real" analogue world. From Caesar's perspective, all he has to ask is "whom can I compel to give me effective and final control of the asset?" and "can that be done by an SA court order only, or do I have to speak to people outside SA?".

Thanks for the further clarification and your previous explanations, it's definitely helped me make more sense of this. Does your latest answer then imply that's it's a no-no to transfer out of an SA crypto exchange into any private wallet? I have a tiny bit of ADA that I recently staked in my own wallet, hence the curiosity.

 

[Arthur]

Thanks for the further clarification and your previous explanations, it's definitely helped me make more sense of this. Does your latest answer then imply that's it's a no-no to transfer out of an SA crypto exchange into any private wallet? I have a tiny bit of ADA that I recently staked in my own wallet, hence the curiosity.

No, I don't think it's a no-no to transfer to a private wallet. Analogously, it's no different to putting your gold in a personal safe with super-secure combination that only you know. The main issue is legal location and control (esp of the legal controller) not physical location, and to determine that we look to the monetary laws in that particular jurisdiction. Laws differ from state to state, of course.

Staying with the gold-in-safe analogy above, there is a valid distinction to be drawn between legal access/control and physical access/control. With intangibles (such as IP or goodwill on a balance sheet or sale contract), of course physical control doesn't apply. But the legal control most definitely does. Long before crypto, intangible assets have been traded, bought, sold and transferred in thousands if not millions of transactions per day, locally and internationally.

NOTE
Edit: Having said that, please don't take the above as legal advice. It is nothing of the sort, just a narrative of how current law easily covers crypto and pointing out that physicalist thinking does not apply even under current law. Nothing stops the State from introducing new rules specifically for crypto. It's dead certain in these benighted times that they will.

 

[Swa]

Not so. Intangible assets have legally existed for centuries - and all are subject to jurisdiction. In ancient times the debate was between intangible assets and intangible rights, certain instances of the latter were valid. Even Talmudic law, which generally regarded intangibles as invalid, recognised certain intangible assets (such as the marriage kethubot). Although ancient Roman Law regarded the sale of intangibles as an emptio spe (like a gamble), certain intangibles such as sales of future agricultural crops were valid at law. Cato writes extensively on this. Modern SA (and Scottish) Roman-Dutch law has long recognised intangible assets in both accounting and contract, and crypto presents no novel legal challenges. SA law amply recognises intangibles, from IP (eg copyright and patent), to goodwill, future liabilities, etc, etc. Remember, too, that banknotes are themselves tokenised (they're not the money, but simply represent a title to money, which is these days nothing, ie intangible).

And most of what you mention here is actually not intangible? A right to a tangible asset does not simply become an intangible asset because you can't physically touch it. Crypto is very much different to anything else as the asset truly doesn't exist. Even in the form of data it doesn't exist as data is simple a state. The fact that transferring to a personal wallet is not deemed as exporting yet it removes the control the state could have over the asset is proof that they don't understand the nature of crypto.

That they have to draft new laws and regulations to deal with crypto is testament to the fact the law currently can't deal with it.

 

[Jan]

Why the world's biggest Bitcoin exchange banned South Africa from margin trading

Binance blocked South Africans from accessing its margin, options, futures, leveraged tokens markets after "productive consultations" with the Financial Sector Conduct Authority (FSCA).

In a statement released on Thursday, the FSCA welcomed the "corrective steps" Binance has taken.

 

[wilhelms_cream]

Is it still possible to leverage trade on other exchanges? I started making some money using leverage on Binance since I don't really have a lot to start off with, but since it's been banned I'm stuck and spot trading isn't working for me.

 

[wingnut771]

Is it still possible to leverage trade on other exchanges? I started making some money using leverage on Binance since I don't really have a lot to start off with, but since it's been banned I'm stuck and spot trading isn't working for me.

use a vpn