Fleeing Western regulatory issues, Binance heads East - but will new troubles arise?

Amidst all these, Binance has a slight window of opportunity to become a DeFi powerhouse but a string of “bad decisions” looms like a dark cloud.

Will BNB sink or swim? There’s only one way to find out! 👇

TLDR 📃

• Binance is shifting focus to Asia due to regulatory issues in the U.S. and EU.
• Binance wants to become a DeFi powerhouse and is taking positions with Binance Labs.
• The company's stablecoin strategy looks reckless and raises some concerns.
• We recommend being cautiously optimistic about the short-term prospects of BNB.

Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your full responsibility.

Binance is betting on Asia 🌏

Binance is facing legal challenges in the U.S. with lawsuits from the SEC and CFTC, and there are rumours of a potential criminal case from the DOJ. In the EU, Binance struggled and had to exit The Netherlands and Belgium. 

All these headwinds have caused its market share to decline from 63% to 45% this year.

However, Binance is actively exploring opportunities in Hong Kong and other Asian countries despite leaving China, its former biggest market. Last week, Binance launched in Japan, complying with local rules. It acquired a majority stake in South Korea's GOPAX earlier this year and plans to enter Thailand in Q4 2023.

Interestingly, the timing of Binance’s expansion into Asia seems perfect. Huobi, one of the larger exchanges in the continent, has continued to face troubles. For instance, rumours have it that the Chinese police took several executives at Huobi away.

Could a $7.5 billion war chest turn Binance into a DeFi powerhouse? 🏗️

CZ once explained in an interview that he is convinced DeFi could take years to evolve, but it would overshadow centralised exchanges once fully developed.

However, many may not know that CZ already plans to capitalise on this coming shift. Hint: it all started in 2019 when Binance DEX was launched on testnet. 

Of course,  the project was ahead of its time, and the technology available then couldn’t fully support the vision. Despite this setback, Binance's determination to embrace DeFi remains strong. 

The early signs of this transition are already emerging. Binance Labs, the venture arm of Binance, reportedly managing assets worth $7.5B, has been actively making significant strides in the DeFi space through strategic investments.

Binance Labs already owns a stake in the decentralised exchange Pancakeswap, the DeFi lending protocol Radiant Capital, the perpetuals exchange Woo Network, and the DEX aggregator 1inch, among others.

And now, the introduction of opBNB, which we discussed earlier this year, has significantly enhanced scalability.

A dark cloud looms large 🌩️  

Binance launched BUSD in 2019 to compete against Circle and Tether, which resulted in a peak market capitalisation of over $20 billion for BUSD.

However, in February 2023, Paxos, the stablecoin issuer, ended its partnership with Binance at the request of the New York Department of Financial Services (NYDFS). With the inability to mint new stablecoins, users started exchanging BUSD for other tokens, and the BUSD era gradually ended.

Now, Binance is searching for new stablecoin partners, but the search is taking unexpected turns.

Binance reportedly partners with two controversial stablecoin providers: TrueUSD and First Digital Labs (FDUSD). While TrueUSD is notable because of its association with the Justin Sun, Binance's recent partnership with a two-month-old First Digital (FDUSD) raises many eyebrows.

That’s not all; the announcement of the partnership coincided with the news of another report that Binance had sold all of its USDC holdings. 

The collaboration between Binance and FDUSD appears hasty, given the latter's unproven track record. FDUSD's attestation is provided by Prescient Assurance, a notable cybersecurity company, but it falls short of the rigorous standards expected for auditing stablecoin reserves by a major crypto exchange.

While there's no substantial evidence indicating that these stablecoins are fraudulent or a scam – something we would not suggest – the limited information and history available raise concerns about their credibility.

So, how does all this play into the near-future outlook for BNB 👇

BNB price analysis 📊

If the word boredom were to be a graph, BNB would be the perfect candidate to represent it. 

The last three weeks have been flat - demand isn’t showing, and that’s a clear sign you should stay away from BNB now. 

Despite the lack of demand, we could still see BNB hitting resistance at $260 in the coming weeks. The trend is already setting itself up for this level.

However, the chances of breaking past $260 are very slim, and the only catalyst for this scenario would be if Bitcoin finally started moving up.

Check this for more alpha regarding BTC and some opportunities we’ve got our eyes on.

Cryptonary’s take 🧠

Our optimism about Binance's expansion in Asia is strong, but we're mindful of its prior losses in the U.S. and EU. 

What excites us the most is Binance's gradual move into DeFi, a shift we believe in and expect to unfold over time. This move holds potential implications for BNB's growth, a long-term strategy that could significantly benefit Binance.

However, the demand for BNB is moderate, with stablecoin risks and regulatory uncertainties causing hesitation.

Partnering with young stablecoin providers, rather than established ones like Tether, puzzles us due to reputation risks and what seems like an unconventional choice.

Our primary focus is closely monitoring this situation, our main concern alongside regulatory issues. As a result, it might not be the optimal time to hold onto BNB for now. 

However, things might brighten over time as Binance expands further into Asia and transitions into DeFi.

As always, thanks for reading! 🙏

Cryptonary, out!