What’s happening with Binance and what investors from Ukraine should know
How the regulators’ excessive attention affected the work of the crypto exchange
Crypto exchange Binance recently had to communicate much more often with regulators from different countries. Thus, Binance's share in the USA market is decreasing due to litigation with the regulator. In addition, the country's Department of Justice recently launched an investigation into the exchange due to suspicions that russians are using it to bypass sanctions. Later, there were accusations of misappropriating client funds and lying to American regulators and investors about their activities. In addition, Binance lost its euro payment partner and lost several markets in the region, including Austria, the Netherlands, Germany, and Cyprus. Of course, all of the above affected the activity of the company around the world, in particular due to overload. The largest were recorded in December 2022 and May 2023.But the exchange continues to work and is looking for new opportunities and markets. Company considers the UAE as one of prospective markets because the country has a favorable climate for digital assets. However, despite everything that is happening in the world, Binance continues its activities in Ukraine.
What is happening in the cryptocurrency market, how the exchange protects investors in Ukraine, why delays in transactions are possible, told Mind the general manager of Binance in Ukraine Kyrylo Khomiakov.
Also read: Crypto Exchange Rating 2023: How investors can strike a balance between security and quality of service
One of the key indicators that show the success of the industry is the level of adoption of cryptocurrencies. Despite all the market turmoil, cryptocurrency adoption has never stopped, and private and institutional investors, as well as traditional businesses around the world, continue to enter the market.
A recent survey of institutional investors by Binance Institutional, which includes investment and insurance companies, bank management funds, banks, pension funds, and other entities, showed that despite market issues during the 2022, most investors (47.1%) maintained their actives in cryptocurrency, and more than a third (35.6%) increased them over the same period. And only 17.3% reduced some of their cryptocurrency orderings. Also, the majority of respondents expect to either increase (50.0%) or maintain (45.7%) their placements over the next 12 months. Only 4.3% of investors said they plan to reduce their cryptocurrency orderings.
According to the survey, centralised exchanges remain the most popular platform for institutional trading (90.5%) and depository activities (58.2%). Liquidity (28.0%), security (26.0%) and reputation (22.5%) were the three key criteria for investors when choosing a trading platform. On Binance, trading volume by institutional investors increased by 15% year-on-year (years 2021-2022).
Regarding the trading activity in the cryptocurrency market, let the data speak for itself. According to a Wublock report, spot trading volume on major centralised cryptocurrency exchanges (CCE) increased by 10.4% in June compared to the previous month. The volume of futures trading on the main CCEs in June increased by 9.5% compared to the previous month.
We see that interest for digital assets and demand for them remain stable in Ukraine. Unfortunately, the war contributed, because cryptocurrency gives people the opportunity to transfer charitable donations quickly and safely, which are so necessary for the country, to each other, to volunteer organisations, and even to the state directly. It’s worth mentioning that a big number of initiatives that allow Ukrainians to overcome difficulties with using money in other countries took place recently.
According to the Tripple A research company, 15.72% of the population of Ukraine, i.e. 6 million citizens, owned cryptocurrency at the beginning of 2022. And the number is growing. So the industry will continue to create valuable and useful products and services.
Dialogue with Regulators
We saw the start of the markets’ recovery in 2023 – that brought regulatory attention to the industry. This is not surprising given everything that happened in 2022. And when regulators pay attention to cryptocurrency, they first of all pay attention to Binance. All this because of the size of our company.
Binance stays in constant dialogue with regulatory bodies around the world, including Ukraine, which is actively preparing for the adoption of cryptocurrency legislation. A number of significant changes in legislation were made because of the introduction of a single European regulation of the crypto-assets market (MiCA). This was a landmark moment in the development of the cryptocurrency industry and the nascent Web3.
The regulatory landscape is changing, and that's good news for users and the industry. MiCA will bring regulatory clarity to one of the world's largest markets and allow the EU and Ukraine as a candidate to become an attractive place for Web3 innovations.
We are actively developing globally and continue to develop in Ukraine, we are currently working on large projects and have many plans. Our users and their funds are under protection. There are no changes in the work of Binance in Ukraine and there have not been. Moreover, there are no prerequisites for them.
Binance Reserve Fund
Binance created an emergency insurance fund (SAFU) in 2018. It offers protection for the exchange’s users and their funds in case of unforeseen situations.
Following the establishment of the fund, Binance started allocating 10% of all trading fees to grow SAFU to a significant level, reaching over $1 billion in November 2022.
Binance encourages all centralised exchanges to publish their insurance fund wallet addresses, as this will benefit the entire ecosystem and demonstrate our collective commitment to the integrity and transparency of the crypto ecosystem to governments, regulators, and all stakeholders. Binance has released the addresses of the insurance fund wallets: wallet 1 and wallet 2.
User funds on Binance can also be verified using our Proof of Reserves system, which provides proof of user assets in custody as well as users' liabilities using a zero-disclosure proof – first of its kind in the industry. The source code is open and has been improved and tested by the crypto community.
Also read: The US sues the largest crypto exchange Binance. What consequences can this bring?
Funds Withdrawal
It took six years for Binance to grow into a global platform that provides financial access to more than 140 million people around the world. Our systems can process 1.4 million transactions per second. But real-time market fluctuations accompanied by periods of high trading volume can cause network congestion, as happened in May with BTC.
Almost all major crypto exchanges inevitably face systemic pressure due to market volatility, and we, despite our best efforts, are no exception and can’t guarantee 100% system stability all the time.
We inform users about this in advance in the Terms of Service. If our users have experienced real trading losses due to problems with our systems, we offer compensation and continue to invest in improving the stability of the platform.
In December, Binance underwent a stress test designed to give the community confidence that their funds are safe. Despite the large number of withdrawn funds on December 12-14, when $6 billion was withdrawn in three days, we were able to conduct all transactions without slowing down, because we provide each asset 1:1.
If a user buys one bitcoin, we buy one bitcoin and place it in safe custody until the user decides to transfer or sell that asset. So, regardless of whether the value of the asset changes from $1 or $1,000,000, every user can withdraw their coins without any problems.
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