A Crypto Trading Clampdown Expands Beyond Binance to Another Large Exchange

As a seasoned crypto investor with several years of experience in this volatile market, I have witnessed the evolution of cryptocurrency exchanges and their strategies to attract and retain high-volume traders. Exchanges offering discounted trading fees to their largest customers is not a new concept; it’s a way to build a loyal user base. However, recent developments in the industry suggest that these perks are being reevaluated.

Cryptocurrency exchanges are taking stricter measures against brokerages who combine multiple customers’ orders to secure discounted, premium trading rates.

In a letter examined by CoinDesk, OKX, the second-largest cryptocurrency exchange by trading volume, has requested prime brokers to provide details about their subaccounts. The required information includes the names of the controlling entities or individuals and the geographical locations of each subaccount. OKX has set a deadline for this information, which is on July 17th.

If you don’t comply, your hidden subaccounts might be prevented from trading and could even be shut down entirely.

As a researcher, I’ve recently come across an update from Binance regarding their Link Plus interface. They have made changes to close a loophole that enabled prime brokers to utilize a multitiered fee structure and offer rebates to clients. This action was taken, according to Binance, “to uphold compliance and establish a fair marketplace for all users, regardless of whether they access Binance directly or through an intermediary.” The initial report on this development was published by Bloomberg.

As a seasoned crypto investor, I have noticed that exchanges reward their top clients with discounted trading fees to keep them engaged and loyal. These VIP investors generate substantial trading volumes, making it beneficial for the exchange to offer them preferential treatment. In theory, prime brokerages, which serve professional and large-scale investors, could pool multiple clients’ trades under a single account at an exchange, thereby qualifying for reduced fees themselves. This not only saves costs for their clients but also strengthens the partnership between the prime brokerage and the exchange.

A source close to the prime brokerage sector explained that this action is primarily taken to enable individual clients to be priced independently.

OKX declined to comment.

According to Eugene Cheung, the head of institutions at Bybit, the exchange is carefully observing the ongoing changes in the prime brokerage fee structures being eliminated by other crypto platforms.

As a dedicated crypto investor, I want to share some transparency regarding our current fee structure. Rest assured, there are no intentions whatsoever to make any adjustments at this time. Our unwavering focus is on maintaining regulatory compliance and prioritizing the well-being of our valued user base.