Binance, the world’s largest bitcoin and altcoin exchange by trading volume, has been the focus of crypto market speculation in recent weeks after blockchain watchdogs detected billions of dollars in deposit outflows, the company’s auditor said it would no longer audit crypto companies, and reports emerged that the company may be under investigation by the US. . Looking at the latest developments, the possibility of US regulators deeming stock market altcoins as securities has attracted attention. Here are the details…
Concerns rise over Binance and altcoin project
Various concerns were clearly reflected in BNB’s recent decline. As we reported on Kriptokoin.com, the price dropped by about 17 percent this month to $245. At its peak in May 2021, BNB was trading at $690 according to CoinMarketCap data. The token’s market cap has dropped from a record $116 billion at one point last year to nearly $40 billion. At the core of the concerns is whether Binance will be prone to a loss of confidence similar to the FTX crisis in November. It’s also impossible to ignore that the first signs of deep distress in FTX appeared when the exchange’s own FTT token began to decline.
While crypto analysts focus on the valuation of the BNB token, they look back on the FTT token’s curve for any warning signs that may have led investors to the vulnerability of the market. There is an important similarity here. Just as FTX’s FTT token is mostly not listed on major US crypto exchanges, BNB is absent from many US exchanges. Outside of Binance.US. Some crypto analysts speculate that major US exchanges may have walked away from a BNB listing for fear of conflicting with regulators. Any problems on the regulatory front could pose a risk to token holders. Lucas Outumuro, head of research at IntoTheBlock, used the following statements:
Exchanges probably do not list BNB as they see it as a security given the centralization of their networks. It’s probably not worth the risk that US stock markets will list a security, especially if it’s a competitor’s token.
FTT designated as security
This week, the US Securities and Exchange Commission labeled FTX’s FTT token as a security in a complaint. Thus, he underlined the risk. The document pointed to the existence of FTT’s “buy and burn” program. He pointed to this as an example of how the token could be intended to serve as an investment. Such programs can be likened to a stock buyback, in which companies use their own shares from the open market to reduce outstanding supply and thus increase their value.
Binance has also been offering a burning program from late 2021, labeled “BNB burning”, detailed on its website and updated on October 13. “BNB is a deflationary currency, meaning it maintains a stable value by burning its tokens throughout the year,” its website says. According to Fundstrat’s head of crypto-asset strategy, Sean Farrell, BNB is probably not listed on most local exchanges because it “could be considered a security by regulators.”
Why don’t exchanges list BNB?
According to Binance’s website, “BNB is the cryptocurrency that powers the BNB Chain ecosystem.” In terms of utility of the token, according to the site, BNB can be used to “pay for goods and services, pay transaction fees on Binance Smart Chain, participate in private token sales, and more.” According to data site CoinGecko, BNB is listed on dozens of crypto exchanges, including KuCoin, Huobi, and OKX.
US exchange Kraken lists over 120 tokens but does not offer BNB to its clients. “Kraken is an agnostic player in the crypto market,” a Kraken spokesperson said. “It has a robust asset selection and listing procedure that ensures assets get the analysis and scrutiny they deserve,” he added. A representative of Coinbase, which did not list BNB, said:
If we haven’t listed a popular asset yet, there may be several reasons: We may have concluded that the asset does not meet our listing standards. We may not have enough information about the asset. Additional technical integration work may be required or we may not be supporting the network for the given token standard.
“BNB is definitely not in a strong position and this is likely to continue as the thorny questions about Binance continue,” Collin Howe, a derivatives trader at B2C2, wrote in a note on Friday.
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