Binance, the world’s largest cryptocurrency exchange by trading volume, has been the focus of cryptocurrency market speculation in recent weeks after blockchain watchers discovered billions of dollars in deposit outflows, the company’s auditor pleaded and reports surfaced that the company may be under investigation by the US. the authorities.
These concerns are clearly reflected in the recent downward trajectory of Binance’s internal token, BNB: the price has fallen around 17% this month to $245, well below CoinDesk’s digital asset broad market index, which is down 5.7%. At the peak in May 2021, BNB was trading at $690, according to data from CoinMarketCap. The token’s market cap has fallen to around $40 billion, from $116 billion sometime last year.
At the heart of the concerns is whether Binance could be vulnerable to a loss of confidence similar to the spectacularly rapid collapse in November of Sam Bankman-Fried’s FTX exchange. It is impossible to ignore the first signs of deep distress in FTX when the exchange’s token, FTT, began to plunge.
So, as cryptocurrency analysts grapple with the valuation of the BNB token, they scrutinize the FTT token arc for any red flags — or yellow ones — that, in hindsight, may have pointed investors to market fragility. A key similarity stands out: just as FTX’s FTT token mostly fails to list on major US cryptocurrency exchanges, so too is BNB absent from a large number of US exchanges. (It is listed on Binance.US.)
Some cryptocurrency analysts speculate that major US exchanges may have moved away from the BNB listing for fear of running afoul of regulators. Any issues on the regulatory front can also be a risk for token holders.
“Exchanges may not be listing BNB because they see it as a security given the centralization of their network,” Lucas Outumuro, head of research at IntoTheBlock, said in an interview with CoinDesk. “It is probably not worth the US exchanges to risk listing a security, especially if it is a competing token.”
FTT is set as collateral
The risk was underscored this week when the US Securities and Exchange Commission called FTX’s FTT token a security in a complaint.
The document cited the existence of FTT’s “buy and burn” program as an example of how the token can serve as an investment. These programs can be compared to stock buybacks, where companies redeem their shares from the open market to reduce the existing supply and thus increase their value.
Binance also offers a burning program, introduced in late 2021, called “BNB Burn,” detailed on their website and most recently updated on October 13.
“BNB is a deflationary currency, which means that it maintains a stable value by burning its tokens throughout the year,” the site reads.
According to Sean Farrell, Head of Digital Asset Strategy at Fundstrat, BNB will likely not be listed on most local exchanges due to the fact that it could be considered a “safety” by regulators.
CoinDesk asked Binance to comment on the lack of BNB token listings on major US exchanges besides Binance.US, and also if company executives were concerned that it might be considered a security. No response has been received as of the time of publication of this news. In a previous communication, the representative indicated that BNB is listed on several major crypto exchanges outside of the US
What do the exchanges say
According to the Binance website, “BNB is the cryptocurrency that powers the BNB Chain ecosystem.”
“As one of the most popular tokens in the world, not only can you trade BNB like any other cryptocurrency, you can also use BNB for a wide range of applications and use cases,” the website reads.
In terms of token utility, BNB can “be used to pay for goods and services, settle transaction fees on the Binance Smart Chain, participate in exclusive token sales and more,” according to the site. A yellow button appears at the bottom of the webpage that reads “Buy BNB Now”. Clicking this takes you to another web page where the user can log into Binance or sign up for an account.
According to CoinGecko, a pricing site for digital asset markets, BNB is listed on dozens of cryptocurrency exchanges, including KuCoin, Huobi, and OKX.
The US exchange Kraken lists more than 120 tokens but does not offer BNB to its clients.
A Kraken spokesperson told CoinDesk that “Kraken is a neutral player in the cryptocurrency market” and that it “has robust asset selection and listing procedures in place that ensure assets receive the analysis and scrutiny they deserve, which includes strict compliance, legal, and security process.”
A representative for Coinbase, which also did not list BNB, told CoinDesk, “If we haven’t listed a popular asset yet, it is likely due to various reasons that may include: We have determined that the asset does not meet our listing criteria, We do not have enough information About the origin, additional technical integration work is required, or the network does not support the token standard.
“BNB is certainly not in a position of strength, which is likely to continue as thorny questions regarding Binance continue,” B2C2 derivatives trader Colin Howe wrote in a note on Friday.
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