Binance just announced the launch of Bitcoin (BTC) option trading on its future platform. However, full cryptocurrency exchanges are being criticized for misleading users. Binance's BTC options have a number of characteristics that are similar to deceptive binary options.
Many exchanges have launched Bitcoin options over the past few months. CME announced its BTC options in February. Meanwhile, Bakkt announced BTC options in mid-December of last year.
With many competitors offering this type of transaction, Binance will now have to participate in this race with their own BTC options market. However, this financial product is worth scrutiny.
Binance offers BTC options for the first time
With the leading futures trading platform in the market, Binance has now revealed its expansion plans with options options included. The exchange announced plans earlier this week.
On April 13, traders can buy BTC and put options, ranging from 10 minutes to 1 day at market prices. The goal of this type of trading is to provide a low fee and spread with a high liquidity platform of Binance. Options trading on Binance is currently limited to Bitcoin only. Moreover, as Binance says it will put in place more digital assets instead of just BTC options, once the transaction finds its motivation.
Bringing Bitcoin option trading into the Binance platform is an expansion of the futures market. But this does not mean that it does not cause controversy.
Binance dominates the BTC futures market
Binance expects to dominate the Bitcoin options market like it did with the BTC futures market. The market crash in March reorganized the positions of many of the leading units in BTC futures.
Although BitMEX has historically been the most popular platform, Binance and Huobi are now the dominant players in the future. Binance has reached an all-time high of $ 9 billion in 24-hour trading volume over the past week, according to the exchange's announcement. Naturally, the exchange is expecting the market to have a positive reaction to its Bitcoin options.
The Bitcoin futures market is also bouncing back after a quiet period of March. Open contracts increased in April, following a sharp decline last month. Although the general open contract is still much lower than what was witnessed in early January 2020, it seems the market is slowly recovering.
Therefore, the future of Binance market can count on a stronger growth. But with that there is no shortage of criticism. There have been allegations by insiders every time Binance added new cryptocurrencies to its future market.
Criticism towards Binance
In January, the exchange was criticized by people participating in the transaction when XRP sharply increased before being officially announced. A similar situation was noted at the time of adding Litecoin (LTC).
Binance has also been criticized for allowing a too high leverage of 125x for the BTC / USD trading pair. A level of risk is no different than gambling, not trading. However, the CEO of Binance Changpeng Zhao (CZ) responded to these criticisms in a very simple way, which is to use great leverage with extreme caution.
- Binance (@binance) October 18, 2019
The anxiety comes from binary options
Now, let's talk about the issue that many people are interested in: What is the problem of the Binance option trading?
Binance is currently the leading margin trading platform in the field of cryptocurrencies, so it deserves careful analysis and evaluation. The introduction of BTC options on this exchange has raised real concerns, because it has similarities with binary options.
If you did not know, binary options were severely criticized by many in the industry. It is often referred to as all or nothing options and has been investigated by the US FBI. Israeli police view this type of transaction as being related to criminal businesses. The European Securities and Market Authority (ESMA) has completely banned this type of business. A simple search on Google will confirm all of this.
Binary trading activities are also subject to increasingly intense scrutiny in the cryptocurrency industry. In November 2019, a New York court charged founders of ATM Coin for fraud in binary options. They were forced to pay 4.25 million USD to resolve the case. In June 2019, the Belgian financial market agency issued a stern warning to CryptoTrader for fraud in binary options trading.
The fragile difference between Binance's Bitcoin options and binary options
There are many more cases like that. In fact, fraud in options like this is one of the reasons that Facebook, Google and other organizations banned cryptocurrency ads for a long time.
The difference between Binance's BTC options and binary options is very fragile. For example, Binance options are extremely short. In a blogpost post, the exchange asserted, Binance options did not accept a fixed payment structure but were used in binary options.
Accordingly, because the payment is subject to change, Binance claims there is no doubt. However, it is clear that the exchange expects this accusation to be clarified otherwise it will take no time writing about it.
Binary options have been responsible for extremely negative press releases in the forex markets and other financial sectors. If Binance brings such shady tactics to the field of cryptocurrencies, then of course, it should know that it is putting the entire industry at a serious risk. The reputation of this industry is at stake.
Therefore, we should be wondering, who will be the final winner of Binance's Bitcoin options trading?
Binance is playing with fire
Any new Binance financial product is expected to impact the entire cryptocurrency industry. This is because this is the largest exchange to date. However, Binance seems to consider itself too big to fail. Fundamental questions such as where the exchange is located and its legal rights have not been clearly answered.
Binance keeps repeating user protection statements whenever possible. For example, Binance delisted with all leveraged tokens last month which were also supposed to protect users. However, based on a closer look, these leveraged tokens are a financial product of FTX. As one of the most popular crypto assets on the exchange, Binance quickly removed them because it was no longer profitable. Other exchanges have since listed FTX leveraged tokens, trying to profit from Binance's angry users.
Does Binance really protect its users?
If leveraged tokens are removed to protect users, what should we do with 125x leverage on the Binance futures platform? Or the fact that Binance is offering margin trading for illiquid altcoins like MATIC that have seen a 70% drop in just over an hour? Or shady trading activity that shows LINK has dropped to 0 USD? Contrary to Binance's claims, user protection is not the driving force of this exchange.
Binance needs to be responsible
If Binance is the face of the cryptocurrency industry, then it must be responsible.
Announcing inappropriate financial products just for the sake of Binance doesn't push the industry forward but instead is a sign of stagnation. Now the acceptance for the cryptocurrency industry has been set aside, instead, it reflects a financial world that many of us have criticized.
When evaluating Bitcoin options, one should ask: do intermediaries (such as exchanges) benefit excessively? Does it involve a binary option to buy money or not? In the coming weeks, financial analysts will undoubtedly look into Binance's BTC options and draw their own conclusions.
Of course, not only because it is Binance, it is automatically legal. The cryptocurrency industry is still too small, and its reputation is still very precarious. Therefore, analysts should be cautious and express their opinions. That will help improve the quality of the entire field.
Therefore, if it's similar to binary options, don't be fooled, even if it's a product of Binance.
Maybe you are interested:
Join our channel to stay up to date on the most useful news and knowledge at:
According to BeInCrypto