Binance, one of the leading platforms by transaction volume in the cryptocurrency market, has introduced new regulations for token issuers and liquidity providers. The new published rules require projects to openly share the identities of market makers, their legal structures and terms of agreement.
Transparency and Balance in the Market Aimed
According to Binance’s new rules, agreements with market making companies that include profit sharing or return guarantees are now prohibited. It was stated that this practice particularly harms the fair trade environment and undermines the targeted environment of transparency and trust. Additionally, token lending agreements need to clearly outline the purposes for which they will be used.
The background of the regulation is how market makers direct the market with their transactions. Binance stated that market makers can reduce price volatility by placing regular buy-sell orders and increase liquidity, especially in newly listed assets, enabling users to trade with low price differences.
Code of Conduct and Sanctions
In the relevant blog post, Binance pointed out that examples of market makers not acting impartially, sometimes deviating from the terms of the agreement and making sales that violate the token supply-schedule or opening one-way transactions, harm the industry. The platform also introduced artificial transactions that increase volume but do not naturally affect prices.
In his assessment shared via e-mail, Binance’s spokesperson said that the new rules will help projects conduct a more comprehensive review with their market maker partners. He also emphasized that users should act by taking market conditions into account.
Binance announced that it has adopted an approach that says, “We aim for a fair and efficient market formation and we never tolerate irregular practices.”
Binance states that it will take swift and decisive action against abuses committed by market makers; He explained that blacklisting could be applied if necessary. However, no specific information has yet been shared about which market makers will be blacklisted.
With the regulations, Binance aims to strengthen its communication with token projects and market makers and increase transparency in the industry.
