Binance and Huobi crypto exchanges contribute 2/3 of the Bitcoin futures market volume despite US authorities restricting their services in the country. Although these exchanges do not offer their Futures market in the US, the traders in the country by-pass trade restrictions in order to carry out high-leverage trade on these exchanges.
Binance is currently under investigation by the US Commodity Futures Trading Commission (CFTC) for allegedly offering leveraged trading to US customers despite having no regulatory clearance for the same. However, the CEO of the exchange Changpeng Zhao had explained back in 2019 at the launch of Binance.US that despite them putting several barriers and blockages for the US traders, it is nearly impossible for them to filter out everyone from the system.
The US Regulatory Clampdowns vs Crypto Traders
CFTC is responsible for regulating the leverage market and it has intensified crackdown on crypto platforms offering leverage trading without the regulatory clearance for the same. Bitmex was under investigation a few weeks ago and now Binance for similar reasons. However, looking at the Bitcoin Futures market it is quite clear that US restrictions have no impact on the volumes of the restricted exchanges.
The main reason for traders to bypass restrictions is the attractive leverage positions available on Binance and other similar restricted exchanges. While many crypto exchanges based in the US also offer leverage trading, however, there are several restrictions in certain cases region-wise as well. While regulatory restrictions are to protect investors from unnecessary risks, the limitations on leveraging trading in the US forced many traders to join Binance and other similar leverage offering crypto exchanges.
Most of these regulatory investigations end up in fines for the crypto exchanges, but it does hamper the business in the short term. One of the key reasons for Binance to launch an independent crypto exchange in the US was similar regulatory restrictions. The exchange has not commented on the nature of the investigation yet but claimed that they have the utmost respect for the regulatory policies of the US.