Binance.US, the U.S. arm of the world’s largest cryptocurrency marketplace, will reportedly seek regulatory approval next month to operate prediction markets in this country.
Binance.US CEO Stephen Gregory reportedly made comments to that effect to a member of the press yesterday at the Rare Evo Blockchain AI Conference in Las Vegas. Binance, the main platform which is not available in the U.S., currently offers event contracts through a partnership with Predict.fun that runs on the BNB Smart Chain. “BNB” is the ticker for the cryptocurrency of the same name. By market capitalization, it’s the fourth-largest digital currency in the world.
Gregory indicated that Binance.US is aiming to file for a Designated Contract Market (DCM) license with the Commodity Futures Trading Commission (CFTC) at some point in August. DCM permitting is required for any legal, regulated derivatives exchange in this country. Event contracts are considered derivatives.
Binance Could Be Formidable Prediction Market Entrant
At a time when cryptocurrency, traditional brokerage firms and prediction market operators are increasingly intersecting, news of Binance.US potentially entering the space is significant because the parent company has the resources needed to make a splash in the ultra-competitive industry.
Binance is privately held, but by some estimates, it’s worth around $100 billion and controls 38% to 39% of global cryptocurrency trading. Last December, the company said it crossed 300 million users globally. Those data points indicate Binance.US could be a legitimate threat in the all-or-nothing exchange space.
However, the company may have other regulatory hurdles to clear. In Kansas and Wisconsin, clients cannot transact on Binance.US in dollars, just crypto. Additionally, the platform is not supported in 16 U.S. states and territories, including New York and Texas, according to the exchange’s website.
The broader Binance platform isn’t available in the U.S. because it’s not registered with financial regulators. In November 2023, the company pleaded guilty to violating U.S. anti-money laundering laws and paid a $4.3 billion fine.
Prediction Markets Could Resuscitate Binance.US
Prior to the aforementioned legal case, Binance.US was one of the leading cryptocurrency exchanges in this country. By some accounts, it controlled as much as 20% of digital currency trading activity, but that percentage tumbled following the controversies and the company ceded market share to rivals such as Coinbase Global (NASDAQ: COIN) and Robinhood Markets (NASDAQ: HOOD).
So it’s possible that Binance.US is looking to prediction markets as a Lazarus act of sorts and it’s possible that strategy will pay off. Coinbase reported a 106% jump in prediction market volume and revenue in the second quarter while Robinhood noted event contracts are its fastest-growing business and one that’s generating more revenue than cryptocurrency trading.
Todd Shriber
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