Binance Launches Singapore and Decentralized Exchanges

Binance, the world’s top cryptocurrency exchange, is extending its services in regulated countries.

The exchange, which has an average daily volume of US$1 billion, launched a cryptocurrency exchange in Singapore on Tuesday (April 23), marking the development of its third fiat exchange. Its first two exchanges are in Uganda and the European Crown dependency Jersey. They were launched in October 2018 and January 2019, respectively.

As Binance CEO Changpeng “CZ” Zhao told TechCrunch last year, “Right now, we are centralized crypto-to-crypto. We don’t offer fiat gateways and so we rely on others to do that. But through discussions with different regulators across the world, we now have those channels. We want to make it easier for fiat currency to get into the crypto world.”

Since then, the exchange has made it a priority to set up fiat ramps, which allow users to buy cryptocurrencies using fiat currencies. The new Singapore exchange, for example, allows the purchase of bitcoin with Singaporean dollars. Binance plans to develop additional ramps for other cryptocurrencies, such as Ethereum, in the future.

In another major news announcement on Tuesday, Binance unveiled its decentralized exchange, Binance DEX. The exchange runs on the Binance Chain, an alternative chain to Ethereum and other blockchains.

The majority of cryptocurrency exchanges are centralized, meaning that transactions are facilitated by a third party, similar to the way that traditional stock exchanges operate. These exchanges are managed by an organization and are often an attractive option for new traders.

Decentralized exchanges, on the other hand, allow transactions to take place with no central authority or third party. Instead, transactions take place between users, within their digital wallets, often removing the price of listing costs and other transactional fees.

“With no central custody of funds, Binance DEX offers far more control over your own assets. We hope this brings a new level of freedom to our community. We will work closely with projects and teams to grow the entire ecosystem,” Zhao said in a press release.

The DEX serves as a complement to Binance’s centralized exchange. Its decentralized services offer users the ability to use a number of different decentralized digital wallets through the exchange.

Centralized exchanges such as QuadrigaCX, Coinrail and Mt.Gox have faced scandals, whereas decentralized exchanges have the ability to provide a platform that could prevent these thefts, hacks and shutdowns from materializing. For these reasons and more, they have been promoted by some industry insiders.

Ethereum Co-founder Vitalik Buterin is one person who favors decentralized exchanges.“I definitely personally hope centralized exchanges burn in hell as much as possible,” Butelin told Coin Telegraph.

Binance reports that its Binance Chain is equipped to handle the same trading volumes that its centralized exchange does, harnessed with similar speed and scale capabilities. While the emergence of decentralized exchanges is still nascent, at this point, liquidity poses more of a barrier to the decentralized exchange’s ability to operate at optimal strength.

“Because Binance’s DEX still relies on the traditional bid/ask system, it won’t do much to solve the liquidity barrier preventing low-volume tokens from offering frictionless conversions for their users,” Bancor Communications Director Nate Hindman told Decrypt.

Binance DEX offers no withdrawal or deposit fees, and provides wallet services and low trading costs.

With an existing network of 10 million users, and a suggested US$446 million in profits last year, Binance is also working on further developments in Lichtenstein and Argentina.

Binance’s BNB Coin, worth US$3 billion, is shifting from the Ethereum blockchain onto the new Binance Chain. With meteoric rises year-to-date, BNB has risen over 400 percent, outpacing Bitcoin. BNB stood at US$23.30 as of Tuesday.

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Securities Disclosure: I, Dorothy Neufeld, hold no direct investment interest in any company mentioned in this article.