Binance Launching Several Crypto-Pegged Tokens on Binance Chain

On Monday (June 17), Binance announced that it is launching a Bitcoin-backed BEP32 token (called BTCB) on its native blockchain (Binance Chain), and it promised to issue several more such crypto-pegged tokens "in the coming days."

Binance says that such "pegged tokens" will be fully backed by the coin being "wrapped", i.e. Bitcoin in the case of the new BTCB token. For the sake of transparency, Binance is publishing the "reserve addresses" so that anyone can easily check that the reserves are really there. According to Binance, inspecting the blockchain is a much easier way to conduct an audit than inspecting cash reserves in a bank.

There is a going to be a new trading pair on Binance.com corresponding to this newly launched token: BTCB/BTC. Apparently, "large buy orders" will be "maintained" on this trading pair on Binance.com, and the price spread will be around 0.1%. This means that people can easily "convert from the pegged token back into the native coin on Binance.com."

Here is how Binance maintains the 100% backing:

"If this buy order is filled, a new order will be placed while an equal amount of funds will be deposited from the reserve address into Binance.com. The sum of the buy order and the funds on the published reserve address will be bigger than the total supply of the pegged token, ensuring there is always 100% backing."

Here are a few more things you should know about BTCB:

  • the BTC reserve address is 3LYJfcfHPXYJreMsASk2jkn69LWEYKzexb
  • Binance has "just reserved 9001 BTC and minted 9001 BTCB."  (You can verify this claim using the Binance Chain Explorer tool.)
  • The BTCB/BTC trading pair will be listed Binance.com in a day or so (and Binance "will issue a proposal for DEX listing as well").

So, why is Binance doing this?

Well, the primary benefit of introducing these new crypto-pegged tokens is that it allows users of Binance's decentralized exchange, Binance DEX, to indirectly trade popular coins that would otherwise not be available on this platform. Increasing the range of assets available for trading should result in an increase in trading volume and liquidity, which is good for all users of Binance DEX.

Binance's blog post on this subject admits that the approach they have taken is "more centralized than atomic swaps"; however, the Binance team feels that this is justified since "it provides a higher degree of ease-of-use to most traders." Furthermore, they say that "most traders are already trusting Binance.com to hold their funds anyway."

Binance is also encouraging other project teams to follow their lead and " issue pegged token of their own coins on Binance Chain." And for those tokens that already exist on Binance.com, Binance promises to do its best to make available on Binance.com a "pegged/native pair."

To those who might criticize BTCB for being too centralized, Bitcoiner Udi Wertheimer (@udiWertheimer on Twitter), the co-host of the "Reckless Review" podcast, has this to say:

Of course, Binance's official non-custodial wallet app, Trust Wallet, will be supporting all of these new crypto-pegged tokens from the first day of their launch:

Today's announcement by Binance has done wonders for the price of the Binance Coin (BNB). According to CryptoCompare, BNB is currently trading at $34.20, up almost 5% in the past 24-hour period:

BNB - 24 Hour CC Chart - 17 June 2019.png

Featured Image Courtesy of Binance

The Swiss Warm to Crypto Investments

The Swiss are shifting more focus to cryptocurrency investments. This is according to a survey taken on behalf of Migros Bank, which revealed that a growing proportion of Swiss residents are invested or actively looking to invest in cryptocurrencies.

The survey which was conducted by market research institute Intervista showed that 7% of savers between the age of 18-55 already hold cryptocurrencies such as ether and bitcoin. Even more encouraging was the finding that 7% of those aged between 30 and 55 plan to extend their crypto portfolios in the future.

Unsurprisingly, the survey found younger participants to be the most bullish on the long term prospect of crypto. According to 13%, aged between 18 and 29, cryptocurrencies will become more "important" in the future.

Less extraordinary were the results of the older generation. Per the survey, respondents aged over 55 were much less likely to own cryptocurrencies, and only 0.5% thought that it was a worthwhile long term investment. 

Switzerland Ups the Ante on Crypto Regs

This uptick in demand for cryptocurrency comes just after Switzerland imposes more stringent crypto regulations. 

Jumping off recommendations issued within both the Financial Action Task Force (FATF) guidance and the EU's 5th anti-money laundering directive (5AMLD), the Swiss Financial Market Supervisory Authority, or FINMA, recently opted to tighten their travel rule.

The rule, which requires crypto firms to disclose customer information for transfers above $1,000, was initially set by FINMA at a threshold of $5,000 (5,000 CHF) but has since lessened to just $1,000 per the FATF and 5AMLD directives. 

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