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Binance Alternatives for US-Based Altcoin Investors and Crypto Traders

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Tomorrow, Binance will close trading and deposits for US-based crypto investors and traders, cutting off access to much of the altcoin market.

And while that’s likely a positive thing for crypto investors who have been burned by altcoin assets in the past, there are a number of alternatives US-based traders can visit to get a fix of the altcoin trading action.

Where Can US-Based Crypto Traders Still Invest in the Altcoin Market?

After tomorrow, the largest portion of the population of crypto traders, responsible for as much as 43% of market activity, will be barred from making deposits or making any trading on Binance, the world’s largest cryptocurrency exchange.

Binance currently offers a few hundred different altcoin assets, ranging from common major cap coins like Ethereum, Litecoin, and Ripple, to more obscure altcoins such as Ethos, Ripio Credit Network, or Storj.

However, when Binance ushers US-based investors over to their new Binance US counterpart, potentially as few as 30 different coins could be listed and that includes Bitcoin among the number.

As regulation spreads across the crypto market, fewer and fewer crypto exchanges are allowing users from different countries trade on their platforms. As of now, the only exchange that still offers some of the more exotic altcoins that and also still allows US-based investors to trade altcoins on their platform is Kucoin, according to crypto traders. However, given the fact that regulation should only increase further, there are still many risks associated with trading on platforms outside of the US, or trading altcoins that could potentially be deemed as securities in the future.

The next best option for crypto traders is to stick with one of the US-based crypto exchanges, such as Coinbase, Gemini, Kraken, Huobi US, Bittrex, and Poloniex. While these platforms lack as large of a catalog of altcoins – far less than the 30 that Binance US is considering – they do offer crypto traders from the US an added layer of safety and security.

The assets listed on Coinbase, for example, are known to comply with US law and have been extensively vetted by Coinbase’s team in accordance with regulatory guidelines established by the SEC and other government entities.

With much of the altcoin market cut off from the largest portion of traders, the market is at an impasse and should transform in the coming days as the value perceptions of altcoins change as a result of increased regulation.

Altcoins that have the support of the likes of Coinbase and other regulatory friendly platforms are likely to dominate in the future simply due to the assets becoming a safer investment compared to other crypto assets. Those that aren’t listed on these exchanges, will be viewed by investors as potentially too risky and could suffer additional losses as a result.

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Tenth Quarterly Burn Decouples BNB from Binance Profit

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Binance’s tenth quarterly BNB burn had analysts discussing the exchange’s continued rise in implied profits despite a supposedly slower quarter. 

Binance BNB Burn #10 and Presumptive Profit

The quarterly BNB burn has become something of a market indicator for the health of the broader crypto industry.

Binance’s tenth burn of over 2.2 million BNB tokens removed almost $40 million worth of BNB from the market. The burn represented “activity across Binance spot, margin, and futures exchanges, as well as the various solutions, divisions, and partners that use BNB” for Q4 2019.

With its longstanding policy of destroying 20 percent of its profits to generate value for its users by shrinking the supply of BNB, the profits of the infamously secretive exchange have always been reverse-estimated from the burn.

If it burned almost $40 million worth of BNB, for example, then that represents 20 percent of its presumptive profit of around $200 million.

The tenth burn meant four consecutive quarters of profit growth and was Binance’s 3rd largest ever in BNB terms and the 2nd largest in U.S. dollar terms. During a sluggish Q4, it was quite a feat. 

Arca’s Interpretation

Digital asset investment management company Arca calculated Binance’s profits as returning to circa 2017 levels at $188 million:

The investment firm arrived at an implied earnings estimate from the profit figures based on Binance’s volumes and fees:

In the exchange’s burn announcement, CZ asserted that:

“Binance Futures now regularly surpasses the Binance Spot exchange in terms of daily trading volumes, even when we only offered Bitcoin perpetual contracts. I’d say that Futures is the biggest catalyst for our coin burn figures this quarter and in the succeeding quarters to come.” 

That was called into question by Arca’s Research Analyst Alex Woodward, who felt that it didn’t tell the full story. Assessing Binance’s revenues has become an imprecise art since it introduced futures and margin trading.

Volumes were far lower in the spot market than they were in 2017 when Binance was last earning the same kinds of revenue figures.

Binance volumes over time
Courtesy Alex Woodard, Twitter, Binance trade volume over time

Messari’s Interpretation

Analytics firm Messari originally came to similar conclusions about Binance’s implied profits, adding that “growth in burned tokens was fueled by the launch of Binance Futures last year which now regularly exceeds spot volume.” 

That was before being corrected by The Block’s Larry Cermack. Cermack pointed out to everyone that “Binance changed their

whitepaper last summer and no longer burns BNB based on profit.” 

BNB whitepaper change
Courtesy Larry Cermak, Twitter

Messari’s Ryan Selkis quickly identified his mistake and the post has since been updated.

Why Was the Whitepaper Changed?

While CZ has been silent on the issue, the amendment made to Binance’s BNB whitepaper was no doubt in anticipation of its U.S. ambitions.

If the price of BNB can be connected to Binance’s profits or revenues directly, or if analysts have cause to assess the price of BNB based on Binance’s presumptive profits, the token starts to look like a security.

Binance addressed that potential problem in advance and failed to notify the analysts, because it has no obligation to do so and because signaling the change could be easily misconstrued.

Instead, Binance is likely more concerned with Chainalysis’ recent accusations that the company platformed the exchange of over 25% of all illicit crypto in 2019.

SEC Position Leaves Public in The Dark

Binance’s whitepaper change burned analysts standing around the BNB fire.

But there remain longer-term transparency concerns, largely caused by the SEC’s “regulation-by-enforcement-action” approach to the industry. Until the sector enjoys the regulatory clarity it sorely deserves, Binance can burn as many or as few BNB tokens as it wants and refuse to connect the amount to any meaningful metric. 

By distancing the performance of BNB from Binance’s profitability, the exchange has taken an important step toward ensuring it is in compliance with U.S. regulations.

As Cermak tweeted:

“CZ told me back then: ‘We also removed the profit language because some regions tend to associate profits with securities, and we would like to distance BNB from that. So going forward, we plan to describe the burn this way, and burn what we burn.’”

The amount of BNB burned may have some relationship with Binance’s profits, revenues, or trading volume in the future. Those connections will be made regardless, as analysts work to make sense of the numbers.

But the tenth burn, which, in CZ’s words, represented the exchange’s “activity” for the quarter, is a sign of ambiguity to come.

Public access to Binance’s data will likely be the biggest casualty in the grey regulatory environment in which crypto currently operates.

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Binance’s P2P merchant program goes live

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  • Binance cites the increasing demand for global users and a need for higher liquidity as reasons for the launch.
  • Merchants on the Android and IOS-enabled platforms earn money when they post fiat currency trading ads.

In a recent press release, crypto exchange Binance announced the launch of its Peer-to-Peer (P2P) Merchant Program, a user-oriented fiat currency trading platform. It stated the reasons for the creation of this platform to be increasing demand for global users and a need for higher liquidity.

Binance CEO Changpeng Zhao said:

In the past quarter, there has been increasing growth in trading volumes on Binance P2P platform, and we have constantly received requests for more fiat-to-crypto access from our global community. To meet the growing users

demand, we are seeking credible merchants for Binance P2P trading platform globally.

Binance has witnessed more than 30% growth in trading volume over the past month, according to Coin360. With over 18 million users, the exchange boasts the largest average monthly traffic. When retailers and merchants on the IOS and Android-enabled platform post fiat currency trading advertisements, they earn money. Binance provides users with support and doesn’t charge transaction fees. 

While Binance.US released its app earlier this month, Binance launched its P2P trading platform in October 2019. At the time, merchants could only join through invitation and referral. Now, however, the merchant program is available through open enrollment. Reportedly, the user experience quality is controlled through an “elimination mechanism.” Binance says that promotional activities will be available to the users in the future. 

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BITMEX, BINANCE DOMINATE BITCOIN PERPETUAL FUTURES MARKETS

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The Rundown

  • Binance Gains Foothold in Bitcoin Derivatives Market
  • Spurious Crypto Exchange Volumes

A recent crypto exchange review has revealed that the two dominant forces in bitcoin perpetual futures were Binance and BitMEX commanding 40% of the market between them. Top exchanges for total volume were a little unexpected though.

BINANCE GAINS FOOTHOLD IN BITCOIN DERIVATIVES MARKET

Research and analytics firm Crypto Compare has recently released its December digital asset exchange review which delves into key developments in the crypto exchange industry.

It revealed that for institutional products, CME still leads the way for regulated bitcoin derivatives with a trading volume for the month at just under $4 billion. Grayscale’s bitcoin trust product (GBTC) has around ten percent of this total traded volume.

For derivatives trading on crypto exchanges, OKEx represented the majority of daily derivatives volumes trading at $3.32 billion per day. Huobi followed with $2.7 billion, BitMEX third with $1.9 billion and then Binance with $797 million.

The report added that the most traded products by total monthly volume were BitMEX’s BTC perpetual future at $53.1 billion. Then it was Huobi’s Quarterly BTC Future at $42.4 billion, followed by Binance’s BTC perpetual future at $29.4 billion.10 BTC & 20,000 Free Spins for every player in mBitcasino’s Winter Cryptoland Adventure!

“In December, BitMEX and Binance represented most of the BTC perpetual futures market volume at $1.7 Bn (40%) and $947 Mn (22.5%) per day respectively on average,”

BitMEX also dominated for Ethereum perpetual futures volumes with 44% of the total market, $3.6 billion in monthly volume. Binance and OKEx followed with $1.9 billion and $1.7 billion respectively.

Volume on bitcoin exchanges that only offer crypto pairs accounted for 79%, $340.29 billion, of the total trading volume. While those that offer fiat to crypto pairs represented 21%, $91.5 billion.

Delving deeper into fiat pairs the report added that 70% of all trading into fiat in December was made with USD. However, volumes in December had decreased from the previous month by 9% to 835,000 bitcoin.

Japanese yen volumes had dropped 11% from November to 715,000 BTC while Euro trading was down just 3% to 222,000 BTC. Bitcoin traded into Tether totaled 7.76 million BTC, down 20% since the previous month.

USDT still dominates the stable coins commanding 76% of the total volume traded followed by USDC, PAX, and TUSD.

SPURIOUS CRYPTO EXCHANGE VOLUMES

In terms of total volumes, there were very strange results indicating that wash trading may be occurring at some of these exchanges.

According to the report, Bitforex was the top crypto to crypto exchange by total volume in December with $35.6 billion. This was followed by CoinBene and LBank at $27 billion and $25.5 billion respectively. There was no mention of the exchange heavyweights such as Binance, Huobi or OKEx.

IDEX was the largest decentralized exchange in December trading a total of $8 million, up 12.75% from the previous month.

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