This leans towards centralization by big companies and government, not the other way around. You can have a completely distributed IT system that no one controls but it's being promoted by a company and the data is being served to you by another company and the blockchain servers are hosted by yet another company. legal entity - individual or collective) decentralization. There's a difference between technical decentralization (i.e. (For the sake of completeness when selecting an exchange) In such a dystopian environment, UK's big banks have been moving to crypto while spreading FUD and flogging their retail customers by blocking fiat transfers to/from crypto exchanges.Īnother side-effect is keeping retail money in mediocre investment products before they catch-up and start offering them crypto services? (wink-wink.).ĪFAIK, big investment banks will need to partner with big crypto exchanges for liquidity.īig retail banks need start offering crypto to their account holders by partnering with big crypto exchanges, so they can fight the neo-banks (Revolut, Monzo), right? (win-win-win-win).Īnd I wonder which one is the biggest crypto exchange out there that could serve such big clients. This would be great for small derivatives traders, but Binance has now bigger fish to fry while dealing with competition (just look at FTX and their fee schedule).Ĭornered by the creeping competition and shareholders sending their dogs, regulation opens the door to an inflow of revenue from corporate customers while creating friction for wind-tunnel competitors (win-win).Īlso it keeps governments happy (centralized control over crypto reporting for capital gains tax) and that means for Binance more access to markets and expansion (win-win-win). Other exchanges like Kraken go in the same direction, hiring dozens of lawyers. To be well regarded publicly, Binance already invested $200M in Forbes magazine and hired experienced regulators. It is clear by now that Binance is targeting one of the top financial centers in the world, London.Īnd wants to make friends in the City and access the big banks who send their auditors requesting a lot of assurance for security, technical stability and overall quality of the product. Small retail customers made what Binance is today by trading and promoting the company.But for the most part, Binance does not need them anymore.Ī few big customers in London nicely replace a whole continent of small retail derivatives traders and potentially allows savings in customer support and infrastructure.įor accessing more markets and bigger clients, any centralized exchange will eventually become subject of heavy regulation. (For those of you who skip Neflix, here's some deeper analysis) Centralized unregulated exchanges before they get regulated, maybe ByBit, KuCoin or FTX. "Decentralized" exchanges before they get too centralized, maybe DYDX or MCDEX. bam!, more regulation to protect them from themselves.Īnd there you go, you have the Three Amigos of Disaster. Third: silly traders making silly trades, then moaning to authorities that they've lost their money. Promoting traders' ruin is OK, because when they lose everything the money stays in the exchange and the winners-soon-to-be-losers will keep gambling it. bigger / frequent bets, higher fee payments.Įspecially in early days, exchanges don't have access to big customers, so they need to squeeze as much as possible from the little guy. It's asinine.Įxchanges promote gambling because. Offering 50x leverage in crypto is way beyond stupid. Second: centralized crypto exchanges are to blame a lot for this because they promote gambling. Their double standard let's them be OK with lottery, casinos, bookie stores all over the UK, plus inexperienced traders with lots of money, but not see that there are small but sophisticated derivatives traders out there who are being discriminated against. Regulators don't understand that the nature of derivatives trading is not the one of a "consumer". The intelligent thing to do is to limit leverage to 1x and limit trade size on accounts, based on documented evidence of potential ruin. Such regulations won't protect smaller retail traders at all.Īll they do is drive them towards less regulated and more dangerous exchanges. The maturity and responsibility of a trader has little to do with the amount of money they hold or even with their retail vs. First, the UK has blanket discriminatory policies ("regulation by cancellation") that benefit large traders against smaller ones.
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