Regulatory turmoil continues! Chinese users remain crucial for Binance

Throughout its history, Binance has consistently been targeted by regulatory authorities in various countries. Not only was it prohibited from operating in the UK in June this year, but in July, it also faced criminal charges from the Securities and Exchange Commission of Thailand. More recently, Binance announced on Twitter that it will cease its services for contracts and derivative financial products in some European countries. With a series of crackdowns on cryptocurrency in China, are Chinese users still feeling confident in the services provided by Binance?

Early decisions significantly reduce the influence of Chinese policies

Recent regulatory actions taken by China on cryptocurrency activities have not only shocked the entire industry but also indirectly led to a sharp decline in cryptocurrency prices. However, for Chinese users, the impact of policy on Binance seems less severe than expected.

Since Binance decided to withdraw its business and funds from China in 2017, it has greatly reduced the impact caused by recent Chinese regulatory actions. Furthermore, Binance provides a variety of cryptocurrencies and financial products for users to trade and use, causing users to overlook issues the exchange may face in other regions.

Moreover, data from CryptoQuant also shows that there is an increasing trend of users from Chinese competitors who are still operating in China moving to Binance.

Lingxiao Yang, Chief Operating Officer of the San Francisco-based cryptocurrency hedge fund Trade Terminal, also mentioned, "Most employees of Huobi and OKEx are still in China, especially their senior executives. Once they come under the control of Chinese regulatory authorities, the security of users' funds cannot be guaranteed."

Significance of Binance

According to data from CoinMarketCap, Binance offers over 1,100 cryptocurrency trading pairs. Besides the exchange, it also operates or supports multiple platforms such as the token IEO platform Binance Launchpad, Binance Smart Chain which is currently the second largest locked public chain, and Binance NFT trading platform.

Rachel Lin, CEO of decentralized derivatives exchange SynFutures, stated, "Binance remains the best choice for Chinese traders, who are more concerned about using Huobi and OKEx."

Ashwath Balakrishnan, Research Assistant at blockchain research firm Delphi Digital, also mentioned, "Binance is the king of altcoin liquidity; it really takes a massive outflow of funds from Binance to confirm the shift of altcoin liquidity elsewhere."

Importance of Binance in China

According to a recent report released by Chainalysis, from January 2021 to June 2021, over $150 million worth of cryptocurrencies were sent to addresses controlled by Chinese users, ranking second only to the United States.

As the Chinese government continues to crack down on cryptocurrencies, reports indicate that Huobi and OKEx have recently dissolved their physical presence in China, further leading to a loss of trust among users in these exchanges. Among the vast number of Chinese cryptocurrency users, attracting them to switch to Binance instead of other internationally renowned exchanges is one of the challenges currently faced by Binance.

However, so far, Binance remains the world's largest cryptocurrency spot and futures exchange, with its dominant position yet to be challenged.