As one of the leading cryptocurrency trading platforms around the world, Binance provides both beginners and experts with competitive rates while making trading crypto simple.
What Is Binance?
One of the world's leading cryptocurrency exchanges, Binance provides a simple way to trade crypto while offering competitive rates for beginners and experts alike. Founded in 2017 by Changpeng Zhao (a Chinese tech entrepreneur), it has grown into one of most popular cryptocurrency trading platforms on earth with over half-a billion users from all around the world.
Binance.US, Binance's platform for USA users, was launched in 2019 and had its own fee schedule.
Almost 200 types of crypto are available for trading, depositing, and withdrawing on Binance, including, but not limited to:
· BTC (BTC)
· Litecoin (LTC)
· Ethereum (ETH)
· Nano (NANO)
· Binance Coin (BNB)
· Binance USD (BUSD)
· Tether (USDT)
Trading fees on bitcoin pairs were removed on June 22 by Binance.US, the U.S. affiliate of the world's largest crypto exchange. The parent company followed suit on July 8. According to Forbes, Binance.US experienced an immediate impact in mid-June and mid-July. Binance.US experienced just a 2% drop in volume, while the importance of other major crypto exchanges dropped by 50% or more. The daily volume of more than 150 crypto exchanges tracked by Forbes has dropped more than 67% for the first month of summer.
These immediate impacts lead to the following big questions:
· Can we expect a trend to develop here?
· If crypto exchanges are allowed to charge no fees, how can they generate long-term profits?
The precedent of Robinhood's Zero-Fees
In 2013, Robinhood (HOOD) started offering free stock trading, free options trading, and free cryptocurrency transactions. After six years of chasing Robinhood's zero-commission strategy, Schwab finally unveiled its own. Over the past few years, U.S. stock brokers have been gradually reducing their fees, resulting in the acquisition of some prominent names such as Scottrade by TD Ameritrade in 2017. Morgan StanleyMS -0.6% acquired ETrade after Schwab acquired TD Ameritrade as a result of zero-fee policies becoming the norm.
Questions will still surround exchanges.
Before the zero-cost policy, Binance.US already had one of the lowest fees, at ten basis points. So, if Binance's ten basis point service fee before its zero fees didn't discourage many market participants, will eliminating it open the floodgates to new customers? I doubt it, but what sets Binance companies apart from their competitors is their contrasting approach. The bravado of Binance.US is likely to turn heads and gain Americans' attention.
The current crypto winter has seen Binance and Binance.US increase their workforces as well as launch a U.S. affiliate program immediately after Coinbase canceled a similar program. Is this a contrarian approach Binance.US can adopt? The Binance team remained shrewd while some of its peers entered into mega deals as Crypto.com and FTX did in 2021 to sponsor major sports franchises and venues.
Just as Robinhood has faced persistent questions over the years about how it makes his money, Binance will also need to explain how it makes money beyond trading fees and selling flow to market makers. With new crypto products such as staking, NFTs, and institutional trading, Binance might be able to create a viable business. However, it is unclear whether the firm's free-trade policy can be sustained due to its limited transparency in revealing how it makes money.
Takeaways
The jury is still out on whether or not zero trading fees are sustainable in the long run, but it's looking more and more like they might be. Withdrawal fees will likely continue to be a main source of revenue for exchanges, but as we've seen with Binance.US, they're not afraid to forgo those fees if it means getting new users. It'll be interesting to see how this trend develops over time and which exchanges decide to jump on the bandwagon. Have you tried any exchanges that offer zero trading fees? Let us know in the comments!