Binance Closes Loophole in Link Plus, Affecting Prime Brokers

3 days ago

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Binance, the world’s largest cryptocurrency exchange, is set to close a loophole in its Link Plus program that allowed prime brokerages to gain additional revenue at Binance’s expense. The changes, effective July 1, aim to realign the fee structure and eliminate unfair advantages.

According to a company representative, Binance will make adjustments to Link Plus, an interface used by prime brokers to handle institutional customer accounts. Several firms used Link Plus to offer clients fee refunds that their trading volumes would not have otherwise allowed.

Per research reports, Binance’s adjustments to Link Plus may reduce revenue for many prime brokers who exploited the system to offer attractive commissions and earn extra money through Binance’s nine-tiered fee structure.

“Since last year, we have notified companies on the Link Program that we will implement enhanced compliance standards and changes to align our fee structure for Link end-users to ensure transparency and fairness,” a Binance representative said in an emailed statement Thursday.

Binance also stated that it understands that these changes may impact some intermediaries. However, it asserts that its users remain their top priority and it commits to upholding compliance and a level playing field.

Impact on Prime Brokers

The new changes target the Link Plus interface, which prime brokers have used to manage institutional client accounts. Several firms exploited this system to offer clients fee rebates they wouldn’t ordinarily qualify for, thereby increasing their profits.

Binance’s top “VIP 9” tier offers users who trade at least $4 billion per month much cheaper costs than other consumers. Prime brokers frequently reached this category by combining accounts from many clients, allowing them to trade at cheaper fees while charging higher rates to their clients and pocketing the difference.

However, starting July 1, changes will directly bind prime broker clients to the tier status to which their Binance trading volumes entitle them, effectively eliminating the option to bundle client accounts. This means that several premier brokers are likely to lose their top-tier status.

This move is likely to impact revenues for many prime brokers, some of whom had structured their business models around these fee advantages. Bequant, a Malta-based crypto trading service, is shifting its attention to main trading as its primary business model revolves around arbitraging Binance’s fee tiers, according to CEO George Zarya.

These changes come in response to complaints from some VIP customers who argued that the Link Plus system provided prime brokers with an unfair advantage. By ensuring that trading fees more accurately reflect individual trading volumes, Binance aims to address these concerns and promote a fairer trading environment.

Furthermore, Binance indicated that it will limit the usage of account features that provide certain users an unfair advantage, while this project is independent of the Link Plus interface redesign.