Changpeng Zhao, CEO of Binance, shakes competition in the market by including a new list of cryptocurrencies that will be operating in Binance US.
Binance US is an independent company closely linked to Binance. Recently, the exchange released the cryptocurrency list under consideration for its bold exchange expansion in the United States, according to Cryptoslate.
Through this report, it was also pointed out that it is likely that this measure has been taken in order to strike a heavy blow to Coinbase, who represents Binance’s biggest competitor. Coinbase is recognized for having an exceptional track record in terms of compliance, which has given it an advantage over different exchangers, so in this case, Binance could take the lead in this field for the first time.
The Binance trade block in the US
On June 14th, Binance announced that it would block customers in the United States from trading on the platform. According to CEO Changpeng Zhao, the movement was made because “short-term pain is necessary for long-term gains.”
At the time, the exchange said users would have 90 days to adopt the new terms. This move of “sacrifice” taken by Changpeng Zhao was fulfilled to the letter.
In fact, US customers who do not comply with the new terms of service before September 12 will not be able to make deposits or trade on Binance.com (withdrawals and access to their wallets and funds will still be allowed).
That movement generated fear and controversy, because Binance is the largest exchange by volume of negotiation. In fact, approximately 20 percent of the exchange traffic comes from the United States. Without their presence, there was a fear that hundreds of lesser known crypto assets would be much harder to buy and sell, destroying the liquidity of alternative currencies.
Following the announcement that trade would stop for customers in the United States, Binance reported a bold move: the launch of Binance US.
It is an exchange that complies with the strictest US regulations. By working with BAM Trading Services, Binance would form a new company based in North American soil. Thus, in addition, it would comply with FinCEN regulations, against money laundering (AML) and the fight against financial terrorism (CFT), among others.
It works as an independent company, which is operated and managed by BAM Trading Services. Since it was announced, the company declared that this exchange (although it would have strong ties with Binance) would be autonomous and would not act as a subsidiary.
It should be noted that the exchange also has other strategies to minimize the leverage that regulators have on the company. Similarly, Binance maintains its assets almost exclusively in cryptocurrencies, eliminating the need for government-guarded custodians.
The report also explained that Coinbase and Bittrex exchangers are maintaining a low-risk conservative nature, willing to spend large sums of money in order to continue to comply with US regulations. This has allowed them to operate smoothly and capture a very important market area.
Cryptoslate also argues that US exchangers are lagging behind their international counterparts and the reason seems to be the high cost of compliance. The explanation tells us that only two years ago, these companies represented approximately 65% of the trading volume in the market and today, it is less than 20, with Binance largely absorbing this lost market share.
However, US exchanges do not stay idly by. For example, Coinbase has been aggressively enumerating new assets to expand its reach and divert Binance’s trading volume, which until now dominates the altcoins market as it has a greater breadth of crypto assets and peers offered.
How much are they willing to risk?
To facilitate the transition, Binance published a “Digital Asset Risk Assessment Framework” to minimize legal risks for its US Binance. This framework is similar to Coinbase’s. Cryptoslate took the task of listing these criteria to analyze each clause.
- Compliance with US regulations against money laundering (AML) and the fight against financial terrorism (CFT).
- The core team has a clear strategy that solves a real-world problem.
- The currency team has a strong and unified community.
- The supply and demand of the
cryptocurrency market are reasonably fair with limited manipulation.
- Market supply and demand meet the minimum profitability standards for Binance.
At the moment the platform announced that it is considering 30 cryptocurrencies out of the approximately 150 listed on Binance.com, which would mean 20% of all digital assets that Binance currently manages.
The 30 listed cryptocurrencies are: BTC, ETH, XRP, BCH, LTC, BNB, USDT, EOS, XLM, ADA, DASH, LINK, NEO, IOTA, ETC, USDC, VET, BAT, PAX, TUSD, RVN, NANO, WAVES, REP, ZRX, ZIL, MANA, LOOM, ATOM, HOT.
Surely this raid by Binance US will move the US markets and also cause the country’s exchanges to launch competitive strategies.