Binance Adopts Stricter Token-Listing Framework Amid Regulatory Headwinds

Binance, the world’s largest Cryptocurrency exchange by trading volume, has reportedly introduced stricter requirements for listing new digital tokens. The move aims to strengthen investor protection against “rug pulls,” or fraudulent tokens, and address concerns about the alleged “lack of oversight” of token listings in the crypto industry. 

According to Bloomberg, the changes began rolling out late last year, including a longer “cliff period” during which coins cannot be sold, increased allocation of coins to market makers, and the introduction of security deposits.

Binance Extends “Cliff Period” To A Year

During the cliff period, a portion of the total coin supply is locked up in a smart contract, gradually releasing tokens according to a vesting schedule. Binance now requests projects to agree to cliff periods of at least a year, up from a maximum of six months.

The exchange also seeks a greater share of tradable tokens to be set aside for market makers to ensure sufficient liquidity.

Binance’s stricter rules have not yet impacted its share of spot crypto trading, as the platform has been recovering from a yearlong slide. The exchange has also maintained its lead in token listings among major exchanges. 

However, some executives involved in listings on Binance have expressed concerns about the changes, citing potential threats to profitability and increased burdens associated with listing new tokens.

Binance’s recent emphasis on investor protections over attracting coin listings reflects its response to regulatory pressure and a commitment to prioritize user safety and security. 

The crypto industry faces increasing scrutiny from regulators. Binance, which previously agreed to pay a $4.3 billion fine for alleged money-laundering violations, aims to address regulatory concerns while maintaining its position in the market.

The new listing requirements are communicated verbally to participants and may vary between deals. Binance denies imposing lock-in periods for listed projects, stating that each project independently decides its token vesting schedule. The exchange confirms the introduction of security deposits, which can be withheld if listing conditions are unmet.

Reward For Information On Corruption

Token listings are crucial in boosting trading volumes and generating commissions for exchanges. Binance, under the leadership of CEO Richard Teng, has extended its lead in coin listings this year, accounting for approximately 40% of the total across major marketplaces. 

Teng, who succeeded co-founder Changpeng Zhao (CZ), aims to strengthen compliance efforts and collaborate more closely with global regulators.

Yi He, one of Binance’s co-founders, oversees overhauling the token listing process to address concerns over transparency and internal management. 

According to Bloomberg, Yi He recently offered a reward for information about verified corruption among Binance staff and emphasized the importance of confidentiality within the team responsible for coin listings.

As the exchange tightens its token-listing requirements, it aims to balance fostering innovation and ensuring investor protection. The crypto industry continues to evolve in response to regulatory scrutiny, and exchanges like Binance are adapting their practices to meet emerging challenges.

As of the current time, Binance Coin (BNB), the exchange’s native token, has rebounded to reach the $600 price level after experiencing a significant dip that briefly pushed the token down to $543. This sudden drop triggered liquidations totaling nearly $7 million within the past 24 hours, according to CoinGlass data.

Featured image from Shutterstock, chart from TradingView.com