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| Take a look at the hits from today's Inside Cryptocurrency briefing: - Binance's new custody option that lets institutional investors keep their assets at independent banks,
- Bitpanda's decision to withdraw from the Dutch market,
- Uncorrelated Ventures' $315M fund targeting infrastructure software startups in the traditional sectors and the crypto industry, and more.
Enjoy your reading! Doğa
p/dogayurduneri | |
| 1 | | Binance, the largest crypto exchange by trading volume, has officially started allowing its institutional clients to keep their assets at independent banks as collateral instead of directly depositing their funds on the exchange. The new custody option aims to reduce counterparty risk and address corporate clients' concerns. More: - The third-party banks letting Binance clients keep their assets with them include Switzerland-based Sygnum Bank and FlowBank.
- Binance said it is in active talks with several other banking partners and institutional investors showing interest in the program.
- As part of the program, corporate investors can hold the collateral in cash or U.S. Treasury bonds, earning around 4% interest while they trade.
- The exchange previously let its clients hold their assets only on its platform or with its custody partner Ceffu, which U.S. regulators labeled as a mysterious Binance-related entity last year.
- The company has been working on the program for nearly two years and began piloting it in December 2023.
- The new custody program came amid a time when Binance faced increased regulatory scrutiny in various countries, including the U.S., Australia, France, Belgium, and Brazil.
- The exchange also recently had to withdraw from several markets worldwide, such as Canada, Austria, the Netherlands, Cyprus, the U.K., Russia, and Germany, mainly due to compliance issues.
- The platform has come under fire, especially from U.S. regulators, over the past years since it built its market share by carrying out multiple functions at once, such as trading and custody.
- Regulators believe these functions should be separated, just as in traditional finance.
Zoom Out: - Counterparty risk is defined as the potential that one of the participants of a transaction defaults on its contractual obligation.
- In the context of centralized crypto exchanges, it refers to the possibility that traders who deposit their crypto or cash on the exchange before trading lose their assets if the platform collapses or halts withdrawals.
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| 2 | | 
What the numbers say: A recent research report from the crypto data platform CoinGecko has revealed the top 10 crypto exchanges in 2023 by their market shares. Binance ranked first on the list by a wide margin, with 52.6%. Throughout the year, the transactions on the platform accounted for more than half of the total crypto trading volume in the market. Binance's closest rival, South Korean crypto exchange Upbit, had only a 9.5% share of the cake. In the top 10, Binance and Upbit were followed by OKX, Coinbase, MEXC, Bybit, HTX, Gate.io, KuCoin, and Bitget, in that order. Coinbase is the only U.S. exchange on the list, thanks to its 6.3% market share. Relevance: Binance closed last year with the highest market share despite all the regulatory challenges it faced throughout the year. In November 2023, the exchange agreed to pay a $4.3B fine, one of the largest-ever corporate penalties in U.S. history, to settle U.S. authorities' money laundering, unlicensed money-transmitting business operations, and sanction violation charges. At the time, the platform's CEO, Changpeng Zhao (CZ), was also ordered to step down and pay a $50M penalty after pleading guilty to violating anti-money laundering requirements and sanctions in the U.S. by allowing terrorist groups to make crypto transactions on Binance. Also, CZ was blocked from engaging in Binance's management for three years. The settlement deal resolved a years-long investigation conducted by U.S. regulators over the exchange. Meanwhile, Binance's market share was not negatively affected by the increased regulatory challenges and investors' concerns around these hurdles. Brands that should care: Binance also faces another lawsuit filed by the Securities and Exchange Commission (SEC) in the U.S., alleging the mishandling of customer funds. The latest settlement did not resolve the SEC's case. Over the past year, many other crypto exchanges, including Coinbase, Gemini, Kraken, and Bittrex, similarly came under increased scrutiny by the SEC. | | | |
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| 3 | | Coinbase, the largest U.S. crypto exchange, has introduced a new conversion fee for the USD Coin (USDC) stablecoin. The platform announced it would start charging a fee on institutional clients converting their funds over $75M between USDC and the U.S. dollar (USD) every 30 days. More: - Conversions between $75M and $150M will incur a 0.01% fee, while those from $150M to $500M will see a 0.15% fee.
- The transactions over $500M will be charged 0.2%.
- The clients of Coinbase's institutional crypto investment platform, Coinbase Prime, will be exempt from the new conversion fee if their assets on the platform are worth over $500M or they hold $100M in USD or USDC on average over a month.
- The Coinbase Exchange Liquidity Program's members qualified as Tier 1 or Tier 2 will also be exempt from the fees whenever they meet their monthly eligibility.
- The fees will be calculated based on the amount when the total USD to USDC conversion volume over the past 30 days is subtracted from the total USDC to USD conversion volume within the same period.
Zoom Out: - Users of the Coinbase Exchange Liquidity Program provide the platform with significant liquidity in exchange for additional incentives or privileges.
- The program categorizes its members in tiers based on their share of total volume within the previous month and their USDC balances.
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| 4 | | Austrian crypto exchange Bitpanda has announced that it would halt its operations in the Netherlands, withdrawing from the country. The firm cited its commitment to complying with local regulations while explaining its decision. More: - The move will see the exchange stopping catering to Dutch residents as of Feb. 1.
- The exchange was not registered with the De Nederlandsche Bank (DNB), the country's central bank.
- The platform advised its users to transfer their funds on Bitpanda to the DNB-registered Dutch crypto exchange Bitvavo before Feb. 1.
- The Dutch users will be able to withdraw or transfer their assets on the platform until Feb. 26, though Feb. 1 will be the last date for trading activities.
- Despite its exit from the Netherlands, Bitpanda has licenses or registrations in 12 European countries, including Austria, Germany, France, Czechia, Norway, and Sweden.
Zoom Out: - Over the past year, several other crypto exchanges, such as Binance and Gemini, withdrew from the Netherlands, citing their inability to meet the DNB's requirements on crypto trading platforms.
- However, nearly 40 virtual asset service providers, including Coinbase, Crypto.com, BitPay, and eToro, are currently registered with the Dutch central bank.
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| 5 | | Payment processing giant Visa has partnered with Web3 payments infrastructure provider Transak to offer direct crypto withdrawal and payment services through its debit cards without tapping a centralized crypto exchange. The partnership will see Transak's services being integrated into the Visa Direct solution. More: - The new integration will allow users to withdraw cryptocurrencies directly from a digital wallet, such as MetaMask, Coinbase Wallet, Ledger, or Trust Wallet, to a Visa debit card.
- The collaboration will also let customers make direct crypto payments at 130 million merchant locations worldwide where Visa is accepted, converting their crypto funds to fiat currencies nearly in real-time.
- Through the integration, users will be able to directly convert more than 40 cryptocurrencies to a fiat currency in 145 countries, including Cyprus, Malta, Singapore, Turkey, Portugal, and the United Arab Emirates (UAE).
- Besides, Transak will ensure all the identity verification checks, anti-money laundering measures, and risk monitoring technologies are in place.
- Transak's marketing head and investor relations lead, Harshit Gangwar, said the integration marks a significant milestone in bridging the crypto market with traditional finance and mainstream adoption of cryptocurrencies.
Zoom Out: - The Visa Direct solution allows third-party service providers to connect to Visa's network and route payments directly to Visa cards.
- The solution processes transactions in less than 30 minutes.
- On the other hand, Visa also offers crypto debit card services in partnership with centralized crypto exchanges like KuCoin, Binance, Gate.io, and Crypto.com.
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| 6 | | The U.S.-based venture capital (VC) firm Uncorrelated Ventures has raised $315M to launch a new fund that would invest in infrastructure software startups both in the traditional sectors and the crypto industry. The firm's general partner, Salil Deshpande, said he had no difficulty raising the capital despite the downward trend in VC funding to startups in recent months. More: - The company will allocate 80% of the fund to early-stage startups working on infrastructure software in traditional sectors and 20% to similar startups in the crypto industry.
- The new fund will increase Uncorrelated Ventures' assets under management (AUM) to over $700M.
- Deshpande underlined that he still sees significant value in blockchain technology, even though the crypto market faced challenges such as high-profile bankruptcies, scams, and criminal charges over the past two years.
Zoom Out: - Uncorrelated Ventures, launched in 2020, has previously invested in crypto prime broker Hidden Road and Indian crypto exchange CoinDCX.
- The firm focuses on both the U.S. and global markets, with a particular interest in India.
- In 2023, the startup ecosystem in the crypto industry experienced a significant drop in VC investments as the total funding retreated to the lowest level since 2019.
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 | Staff Writer | | Doga is a tech and science editor who has been writing news for nearly 10 years. She worked for leading tech platforms and mainstrem media channels as an editor and presenter throughout his career. Then, she carried her know-how to more than one platform. She is a part-time cat lover and binge-watcher, and also fond of science, space, and emerging tech. She always has a story to tell. She is a bit addict to the laughter and -unfortunately- the '90s culture. | | This newsletter was edited by Aaron Crutchfield | |
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