Binance To Setup Crypto-Fiat Exchange In Malta

  • Binance close to closing a deal to open a fiat to crypto exchange in Malta
  • Binance has been struggling to secure a license in Japan 
  • Malta looking to open its doors to blockchain business

Yesterday, news broke from Nikkei that the Japanese financial regulatory body – the FSA (Financial Services Agency) – was planning on warning Binance that they must register as an exchange or face legal action. 

Binance appears to have been planning for this eventuality and is looking to setup a crypto-fiat exchange in Malta due to its favourable legal landscape.

CEO Zhao Changpeng recently told Bloomberg it is looking to build a “fiat to crypto exchange” in Malta. According to the CEO, the company is close to signing a deal with the local banks to secure deposits and withdrawals. However, it is uncertain when this exchange is looking to launch.

The choice of Malta may seem strange considering the exchange is predominantly based in Asia; Zhao Changpeng explained the decision to Bloomberg saying that:

“Malta is very progressive when it comes to crypto and fintech.”

Zhao Changpeng Binance CEO

Malta Opens Doors To Blockchain

Jurisdictions such as the U.S. and China have been clamping down on crypto-asset exchanges either shutting them down completely as China have done, or making operations exceedingly difficult as is the case in the U.S.. Listing any altcoins which are deemed a security in the U.S. requires registering with the SEC and CFTC; this compliance is hard to get and expensive. 

Malta is looking to become a hotspot for crypto-asset innovation by relaxing regulations. The small nation may have secured a deal with one of the largest companies in crypto, a move that will surely bring jobs and tax to Malta.

Joseph Muscat, Malta’s prime minister, has said they aim to be “global trailblazers in the regulation of blockchain-based businesses” and recently welcomed Binance to Malta:

Binance Dominance

If the license in Malta is secured, the company will have two operational exchanges: the pre-existing exchange which is purely crypto to crypto with little to no KYC/AML compliance and the fiat to crypto exchange in Malta which will likely require greater KYC and AML procedures in order to secure and maintain its banking partners - they will not want to expose themselves to the risks of money laundering or terrorist financing claims.

To further their dominance in all aspects of crypto-asset trading, they are apparently in development of a “fully decentralised exchange” that will run on a “tailored blockchain” called Binance Chain.

The DEX (decentralised exchange) will work alongside their existing business model which, if successful, would mean Binance will operate three tiers of crypto exchanges. This would surely lock in their place as the world's largest cryptocurrency exchange.

Coinbase-Backed Blade Launching Zero-Fee Trading for BTC, ETH, and XRP Perpetuals

Coinbase-backed crypto derivatives exchange BLADE, which launched last September, plans to offer (starting in February) zero-fee trading for Bitcoin, Ether (ETH), XRP, Zcash (ZEC), and Monero (XMR) perpetual contracts.

What Are Perpetuals?

Here is how BLADE defines perpetuals:

"Perpetuals (aka perpetual swap contracts) are financial derivatives, similar to futures, that enable traders/investors/speculators/hedgers to easily long and short cryptocurrencies with leverage. They are named perpetuals because they never expire and they are classified as swaps because payments are 'swapped' between counterparties on a periodic basis. Perpetuals represent the price of a perpetual claim on an index (e.g. the BLADE ZEC/USDT index)...

"Trading perpetuals is analogous to trading the underlying asset/cryptocurrency, but with leverage and a simple and efficient mechanism to short."

According to BLADE, trading perpetuals offers two advantages over trading regular (i.e. expiring) futures:

  • "Since perpetuals never expire, traders never need to roll over their futures contracts from the front month to a further-out month"
  • "Perpetuals typically trade closer to spot because of periodic payments which close the gap (or basis) between perpetuals prices and underlying index prices"

BLADE offers both vanilla perpetuals ("simpler contracts in which P&L is denominated in the quote currency") and inverse perpetuals ("more complex contracts in which P&L is denominated in the underlying currency"):

  • vanilla perpetual contracts exist for Ether (ETH/USDT), XRP (XRP/USDT), Monero (XMR/USDT), and Zcash (ZEC/USDT).
  • inverse perpetual contracts exist for Bitcoin (BTC/USD and BTC/KRW).

A Little Background Information About BLADE

According to a report by Techcrunch, BLADE was founded by Jeff Byun and Henry Lee, and it has raised $4.3 million in seed funding from a host of investors, including Coinbase, SV Angel, A.Capital, Slow Ventures, Justin Kan and Adam D’Angelo. 

Shortly before launch, BLADE CEO Jeff Byun told Techcrunch that perpetuals are “arguably the fastest growing segment of cryptocurrency trading.”

To avoid trouble with U.S. financial regulators, BLADE is "an offshore entity with a U.S. subsidiary," and it does not allow U.S. investors/traders to use its platform. 

BLADE is the only digital asset exchange that focuses exclusively on perpetuals (aka "perpetual contracts"). It allows "leveraged (up to 150X) speculation and hedging on a large selection of cryptocurrency pairs." Also, it is worth noting that BLADE "does not accept fiat currency; margin, profit-and-loss and settlement are in cryptocurrency - currently Tether and Bitcoin."

Zero-Fee Trading in Crypto Perpetuals

According to a report by Coindesk, starting next month, BLADE plans to compete with its much larger rivals -- the main one of which is BitMEX -- by offering "0.00% fee crypto perpetuals trading." 

In contrast, here are the maker and taker fees BitMEX charges for its two perpetual contracts:

  • For Bitcoin (up to 100X leverage), the maker and taker fees are 0.0250% and 0.0750% respectively.
  • For Ether (up to 50X leverage), the maker and taker fees are -0.0250% and 0.0750% respectively.

Also, Coindesk's report states that there will be "no restrictions or eligibility requirements."

Featured Image Courtesy of BLADE Holdings, Inc.