Binance has made a significant move in its token listing policy as regulators keep a close eye on the platform. With these new measures, the leading cryptocurrency exchange introduces longer “cliff periods” for token sales, demands more significant allocations for market makers, and requires security deposits from projects seeking listings. This aims to reduce the risks associated with token listings, ensuring a safer trading market for investors.
Binance Extends Restriction On Token Sale
Sources familiar with the matter, who preferred to remain anonymous, revealed that Binance has introduced a longer “cliff period” for new listings, during which the sale of tokens is restricted. Additionally, the exchange is mandating that a larger portion of coins be allocated for market makers and is requiring a security deposit from projects seeking listings.
These new rules include extending the cliff period to at least one year, a massive increase from the previous maximum of six months. This period involves locking up a portion of the total coin supply in a smart contract, which then releases the tokens gradually following a vesting schedule. Market makers, crucial for ensuring liquidity, are allocated tokens under specific withdrawal restrictions.
Binance’s move to demand a greater share of tradable tokens for market makers aims to guarantee adequate liquidity. However, the exchange clarified that it does not impose lock-in periods for projects listed on its platform, allowing each project to independently decide their token vesting schedule. Despite the imposition of “monthly limits for certain withdrawals,” specifics were not disclosed.
The crypto exchange’s decision to tighten listing standards came because of past criticisms of exchanges for their lax oversight, which in some instances led to market manipulation and losses for smaller investors.
Despite concerns from executives about the potential impact of stricter listing requirements on profitability and the difficulty of listing new tokens, Binance’s market share in spot crypto trading remains robust.
Binance Enhances Compliance Efforts Under New Leadership
Richard Teng, the new CEO who succeeded co-founder Changpeng “CZ” Zhao in November, has committed to enhancing compliance measures and strengthening partnerships with global regulators. Following an agreement with US authorities, Zhao resigned and is currently awaiting his sentencing.
Over the past year, the company faced criticisms and regulatory actions in multiple countries for operating without proper licenses, notably leading to a shutdown of its operations in India. Yi He, a co-founder of Binance alongside Zhao and the mother of his children, is now leading an initiative to revamp the process of token listings, sources say.
In February, she took to the X social media platform, announcing up to $5 million in rewards for details on proven corruption within Binance’s team. In her post, made in Chinese, she highlighted that the group responsible for coin listings would enhance its internal management, warning that leaks could result in firing. A study of token listings between 2017 and 2021 showed Coinbase’s selection process to be stricter than Binance’s, leading to better initial returns on Coinbase, although both platforms had positive early returns.
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- Source: https://coinpedia.org/news/binance-revamps-token-listing-rules-amid-regulatory-scrutiny-aiming-for-improved-safety/
