Binance.US, the American division of the world’s largest cryptocurrency exchange, is expected to request regulatory permission next month to launch prediction markets in the United States.
Binance.US CEO Stephen Gregory reportedly shared this news with journalists during the Rare Evo Blockchain AI Conference held in Las Vegas. While the main Binance platform is not accessible in the U.S., it currently provides event contracts via a collaboration with Predict.fun on the BNB Smart Chain. The ticker “BNB” represents the cryptocurrency of the same name, which ranks as the fourth-largest digital asset by market capitalization worldwide.
Gregory mentioned that Binance.US plans to apply for a Designated Contract Market (DCM) license from the Commodity Futures Trading Commission (CFTC) sometime in August. Obtaining a DCM license is essential for operating any lawful, regulated derivatives exchange in the U.S., as event contracts are classified as derivatives.
Binance May Become a Major Player in Prediction Markets
As cryptocurrency, traditional brokerage firms, and prediction market platforms increasingly converge, the news of Binance.US possibly entering this sector is noteworthy. The parent company possesses extensive resources to make an impactful entry into this competitive market.
Despite being privately owned, Binance is valued at around $100 billion, commanding 38% to 39% of global cryptocurrency trading. In December 2023, the company reported surpassing 300 million users worldwide, suggesting that Binance.US could pose a significant challenge in the all-or-nothing exchange arena.
Nevertheless, the company faces additional regulatory challenges. In states like Kansas and Wisconsin, users cannot transact in U.S. dollars on Binance.US, with operations restricted solely to cryptocurrencies. Furthermore, the platform is unavailable in 16 U.S. states and territories, including major markets like New York and Texas, as outlined on the exchange’s website.
The broader Binance platform remains inaccessible within the U.S. due to its lack of registration with financial authorities. In 2023, the company acknowledged its guilt in violating U.S. anti-money laundering regulations and incurred a hefty fine of $4.3 billion.
Prediction Markets Could Revitalize Binance.US
Before facing numerous legal challenges, Binance.US was a frontrunner among cryptocurrency exchanges in the United States, accounting for as much as 20% of digital trading activity. However, this share dwindled following a series of controversies, leading the company to lose ground to competitors like Coinbase Global (NASDAQ: COIN) and Robinhood Markets (NASDAQ: HOOD).
Consequently, it appears that Binance.US is exploring the prediction market sector as a potential revitalization strategy. This approach has shown promise, as Coinbase recently reported a remarkable 106% increase in prediction market volume and revenue for the second quarter, while Robinhood noted that event contracts are now their fastest-growing segment and surpassing cryptocurrency trading in revenue generation.