Coinbase, Kraken and Gemini are challenging Binance on the regulatory front.
This is what Katherine Chiglinsky, Olga Kharif and Matthew Leising claim on Bloomberg.
Binance is currently the world’s largest crypto exchange, and probably the one with the most users, but its regulatory compliance has recently been questioned by many financial market regulators.
For example, it has a dedicated website for the US market, Binance.us, because the original site was not fully compliant with US law.
However, the US crypto market is becoming increasingly important, and is by now the most important in the world, especially after China’s crackdown on cryptocurrencies.
Coinbase, Kraken and Gemini vs Binance
For this reason, the three largest US crypto exchanges, Coinbase, Kraken and Gemini, may have a powerful weapon on their side to combat the overwhelming power of Binance, especially in the US market.
Gemini, which is headquartered in one of the states with the strictest regulation of financial markets (New York), has always focused on this feature, namely perfect compliance with all US regulations relating to financial exchanges, but despite this still appears to have trading volumes more than a hundred times lower than Binance.
Coinbase, for example, has volumes of around one-tenth of those of its main foreign competitor, while Kraken stands at around one-twentieth.
According to Bloomberg, at the moment “touting adherence to the rulebook looks very smart”.
However, the point of contention is probably not the US markets, where Binance.us records trading volumes equal to half those of Kraken, whereas the original site should theoretically not even operate, but the foreign markets on which US exchanges struggle to compete with the Chinese giant.
Binance actually originated in China only, but has long since given itself a liquid structure without actually having a single physical location, and operates with several companies located in different parts of the world.
In a number of markets, such as the UK, it is being seriously questioned whether the exchange is operating within the law, which could help its competitors who are compliant.
For example, Cameron Winklevoss of Gemini said:
“We’re playing the long game. We’re trying to be the fastest tortoise in the race. The long game pays off over time”.
However, we should not underestimate Binance’s ability to comply with the various regulations in the countries where it is accused of not being compliant, because it is still a relatively young exchange (just four years old) that has grown very quickly. In other words, it could be just a matter of time, since it is difficult to imagine that this exchange will not be able to comply with the regulations like less important companies such as Gemini have done.
A different scenario would be one in which Binance would not be able to regulate itself due to the fact that it doesn’t have enough technical requirements, for example in terms of transparency, to meet the authorities’ demands, but as of today this seems a scenario that is not particularly likely.