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December 28, 2024
Cryptocurrency based startups opt for listing on cryptocurrency exchanges like Binance for trading. Binance represents the world’s largest crypto trading platform in terms of volume. Apart from innovative offerings in terms of crypto based products and services, crypto and blockchain based companies scale up their growth by listing on a cryptocurrency exchange. With a view to comply with the listing requirements of crypto exchanges, companies also opt for blockchain lawyers to review and prepare a legal opinion for their tokens. This legal opinion essentially describes whether the token qualifies as a utility token or a security taken, depending upon which the decision regarding listing of such cryptocurrency is taken.
As it is well known, cryptocurrency is a digital or virtual currency that is secured by cryptography. Since it is secured under the cryptographic system, it is nearly impossible to counterfeit or double-spend. A cryptocurrency network is usually de-centralized as compared to the regular currency and is based on blockchain technology. Blockchain technology is a distributed ledger implemented using a distributed network of different computers. Therefore, it operates completely virtually. It is vital to note that since cryptocurrency is not centralized it is not issued by any government authority. It is highly immune to interference or manipulation by the central government. In essence, a Cryptocurrency Exchange is a platform that allows users to exchange or trade different cryptocurrencies like Bitcoin, Ether, and the like.
Listing on a cryptocurrency exchange is a challenging process as it requires a thorough due diligence in advance. The essential requirement is to create a community of supporters along with a support network that helps in forming the right team and getting the desired promotions. The due diligence process includes reviewing of business documents like the whitepaper, investor agreement (if any), along with legal opinion stating that the token is a utility token supported by detailed reasoning.
Trading Platforms are the websites that connect buyers and sellers and charge fees for each transaction made. Direct Trading is involved in those outlets that provide an immediate person to person exchanges. This process consists of people from various places in the world that are engaged in trade currency through their bank account. Direct trading exchanges don’t possess a stable market price as each retail determines its exchange rates. Brokers are the websites that anyone can visit to buy their cryptocurrency at a price set by the broker. They are similar to Foreign Exchange Traders.
Binance, a cryptocurrency exchange, is a company involved in the cryptocurrency system. It issued over 200 million Binance coins (cryptocurrency) in July 2017, which raised about $15 million. It had its operations in Hong Kong, Japan, and Taiwan. There have been instances where Binance has been warned for operating without a license and trading digital assets. After some time in 2019 February, the company announced that it would launch a fiat-to-crypto currency exchange to be headquartered in Malta, by providing the headquarters address in the European Union. However, Binance was not authorized by Malta financial institutions to continue trading cryptocurrencies and therefore it was not subject to regulatory oversight. The documents such as the licenses and the headquarter location provided by Binance to prove their stances were extremely unclear and the company stopped responding to the request of the customers. The CEO of Binance made a statement that there is no requirement for the company to have its headquarters established as the whole system of cryptocurrency operates online. The company had to face repercussions in the form of being blocked in many jurisdictions such as China and others, however, Bloomberg Businessweek stated that Binance is 2020’s one of the most notable businesses. The company’s history has also transformed with the help of the acquisition of CoinMarketCap, i.e. the largest cryptocurrency data aggregator in the world, for an undisclosed amount.
There are various products and services that are offered by Binance such as the cryptocurrency trading. Over a period of time Binance created a reputation of reliable technology with low trading fees. With its increasing popularity Binance opened up its offices in Singapore after establishing itself in various Asian countries such as India and other Southeast Asian regions. Binance launched its trading services in Singapore with only one pair of trading i.e. Singapore Dollars and BitCoin. Binance also took action to ensure your customer guidelines were taken into consideration.
In a short amount of time, Binance also decided to disallow the access to trading services in the US to people who did not complete their know your customer process. Binance stated that though they will have access to their funds, the company would not allow them to trade or deposit in the Binance account. Towards the end of 2019, in the month of September, Binance announced that the cryptocurrency on Binance could also be purchased with the fiat currency using its OTC trading platform. Over the period of time Binance introduced new trading pairs for a better informed trade.
Another product that Binance launched in the month of January 2019 was the purchase of cryptocurrency with the help of debit and credit cards. However, there was a limit to who could use this feature and was prohibited for countries like Iraq, Cuba, Afghanistan and Libya in addition to New York, Hawaii, Georgia, Mexico and Washington. In the month of 2020, Binance also collaborated with Swipe for its majority stake in the cryptocurrency based debit card. It was, however, deleted later. In its effort to extend the services to the US customers, the company decided to license its technology to the BAM Trading Services to prepare to launch a US dedicated service Binance US. Post its launch Binance US also launched fiat cryptocurrency pairs in 2019. According to CryptoCompare, an online data aggregator platform, Binance US was the 34th largest platform for trading cryptocurrency for 24 preceding hours on April 2, 2020. In November 2020 the company also began blocking many of its US customers by their IP addresses, but before doing so, it provided a time period of 90 days to withdraw funds from the Binance accounts.
With the rising expansion of the Binance over the world, the company also expanded its platform to Australia. It allowed the Australian customers to buy bitcoin with cash. The brokerage service provided by the Binance Lite Australia charged 5% transaction fee plus GST on all bitcoin purchases. The company plans to offer these services in future as well. It also extended its services in the UK in 2020. This will also be affiliated with US, Singapore, Uganda, Jersey in offering fiat-to-cryptocurrency trading opportunities. Binance UK has to be registered in the UK according to the UK Financial Conduct Authority and offer services throughout the UK and Europe.
The company also introduced margin trading capability in its new platform, Binance 2.0. Under this service, Binance customers transfer the coins from his or her exchange wallet to the margin wallet facility under the Binance trading. This feature allows the customer to use the coins in the margin wallet to use those coins as a collateral for borrowing additional coins. Customers can trade their borrowed coins on the Binance exchange page, as though they were their own. They then separately settle the debts by paying the currency on the margin wallet screen. The company also allows the customers to lend some binance coins, ethereum classic and tether for a period of 14 days at an annualized interest rate of 15%, 7% and 10% respectively. It lends its binance coins on the basis of both a gross program basis and as per individual customer basis. After a period of time, the name of the service was changed from Binance lending to Binance saving with no material alterations or additions to the service offerings.
The company also announced two derivative features Feature A and Feature B. These two features were launched by the contest among traders testing the two platforms. The contest was performed to obtain the feedback on trader preferences between the platforms prior to the launch of actual trading. At the end of the contest, it came out that the features were added to the permanent features of Binance.
The company commenced to invest in FTX, a cryptocurrency derivatives trading platform closely affiliated with Alameda Research leveraged tokens. The company made a first significant investment into FTX by an outsider. Initially it announced the FTX’s BNBBull and BNBBear leveraged tokens however at a later stage it would delist the FTX leveraged tokens because of the customers losses in the product. The company stated that due to the lack of understanding between the company and the customer, it delisted the tokens. The company also started a buying out option and buying back option in the app. With the advancement in technology and the development of the company, Binance developed its own blockchain, Binance chain which it launched in April 2019.
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