Binance, the world's biggest cryptocurrency exchange by trading volume, is rolling out a platform for VIP investors as other market players hunker down in a “crypto winter”.
Binance Institutional aims to upgrade the company's offerings to high-net-worth individuals (HNWIs), family offices and hedge funds after institutional traders dumped Bitcoin at a record pace last week, analysis by CoinShares found.
Brokerage services, which Binance is planning to add to its new platform, “are well positioned to help our industry bridge some of the gaps between the crypto and traditional financial markets and drive continued digital asset growth”, Changpeng Zhao, chief executive of Binance, said in a statement on the company's website.
Binance did not respond to The National's requests for comment.
High inflation and rising interest rates are forcing family offices and HNWIs to reconsider their asset allocations, according to Swiss bank UBS.
More than 200 of the world's single largest family offices manage a total net worth of about $493 billion, with individual families’ net worth averaging about $2.2bn, it said.
However, regulators are urging investors to be aware of the risks if they are considering entering into decentralised assets such as cryptocurrencies.
“From the financial institutions’ perspective, the challenge is to adopt DeFi (decentralised finance) in a way that keeps to their regulatory obligations to customers,” Wai-Lum Kwok, senior executive director for authorisation and FinTech at the Financial Services Regulatory Authority of Abu Dhabi Global Market, told The National this month.
“From the customers’ standpoint, they need to understand the risks before investing in the DeFi space.”
The top five cryptocurrencies by market capitalisation have lost more than half their value since the start of the year, according to CoinMarketCap data.
So far this year, the two largest digital coins — Bitcoin and Ether — have plunged 55 per cent and 67 per cent, respectively.
The sharp decline marks the start of a “crypto winter”, not seen since 2018, when Bitcoin dropped 80 per cent and then took more than a year to find another peak, according to analysts.
Binance's new platform offers execution and over-the-counter (OTC) services including instant cryptocurrency pricing and algorithmic trading, asset management services and a Binance Broker Programme for enterprise clients to leverage Binance technology for their own businesses, according to its website.
VIP investor privileges include fee discounts and a higher 24-hour withdrawal limit, which currently stands at 100 Bitcoin for verified users.
Despite the bear market, Binance is rolling out products, expanding its workforce and entering into deals with the likes of footballer Cristiano Ronaldo to promote non-fungible tokens.
The move comes as Binance's biggest rival, Coinbase, and cryptocurrency lender BlockFi reportedly plan to cut their workforces by up to 20 per cent, according to Bloomberg.
In a recent interview with Bloomberg, Mr Zhao said he would like Binance to be “the adults in the room”.
After years with no official headquarters, the chief executive has set up a home base in Dubai, where he is working to gain regulatory approval for Binance to operate in jurisdictions around the world.
In March, Dubai adopted the Dubai Virtual Asset Regulation Law, which aims to create an advanced legal framework to protect investors and provide international standards for virtual asset industry governance that promotes responsible business growth in the emirate.
It also established the Virtual Asset Regulatory Authority as an “independent authority” to regulate the sector throughout the emirate, including special development zones and free zones, but excluding the Dubai International Financial Centre.
In April, Binance received in-principle approval from the Abu Dhabi Global Market to operate as a broker-dealer in virtual assets in the UAE capital. It also has approval to operate in Dubai, Bahrain, France and Italy but has faced greater regulatory scrutiny in the UK and Singapore, among other jurisdictions.
Last month, Mr Zhao said Binance is working to gain a licence in Germany, Europe's largest economy.
