The US arm of the world’s largest crypto Exchange, Binance, secured $200 million in funding at a pre-money valuation of $4.5 billion. Binance.US launched in 2019 and is operated by BAM Trading services through a licensing agreement with Binance. Binance.com ceased servicing US customers before the launch of Binance.US, citing KYC requirements and regulatory uncertainty in their justification for the move.
Binance.US is just outside the top 10 exchanges by trading volume globally despite being US-focused and listing only 88 coins and tokens. It has a 24hr spot trading volume of $435 million compared to Binance.com which has a volume of $26 billion. Further, futures trading is not available on Binance.US. Futures trading volume on Binance.com comes to an additional $78 billion every day. Regulatory issues limit the ability of Binance.US to offer crypto derivatives. Should this change in the future, it would open up a large market for new products and services. RRE Ventures, Foundation Capital, Original Capital, VanEck and Circle Ventures are all said to have invested in the company’s first external round of funding. Funds are earmarked to “invest in its spot trading platform and toward the development of new products and services.” Given the specific choice of words, it seems that US investors’ hopes of being able to trade crypto futures like many Binance.com users will be put on hold. An IPO may well be on the cards for the US exchange; as CEO Brian Shroder stated,
“I personally feel that there is value in going through the process of going IPO because it requires a lot of regulatory discussions and those are things we welcome and are excited about,”
The $4.5 billion valuation may seem like a bargain for early investors as Coinbase, which went public in 2021, is worth $38 billion. However, Coinbase currently has ten times more trading volume than Binance.US, which may be reflected in the valuation. In addition, Binance’s trading fees are much lower than its competitor’s, which may help it attract new customers as the company is further legitimized through US-based investment.