I hold both BNB and CRO, they are the tokens created by Binance and Crypto.com respectively. I like to think of these cryptocurrencies as exchange coins. Their value is loosely derived from the success of the companies behind them. Binance has recently been on the receiving end of several damning penalizations from countries and notable companies. On the other hand, Crypto.com has been sharing a seemingly endless supply of good news. This has prompted me to respond to the news by converting some of my BNB into CRO. Let’s dig in, and see exactly whats happening to these companies and what effect it may have on the value of their respective tokens.
Regulatory Crackdown on Binance
I wrote about the Canadian crackdown on Binance in my previous letter. Additionally, I covered some more international Binance crackdown news on CryptoVantage. In this letter I’m going to take things a bit further and talk about what effect this may have on the price of BNB and other tokens associated with Binance Smart Chain. The latest action taken against Binance is from Barclays, a UK based banking institution. They have decided to outright block deposits to Binance from their customer’s accounts.
This is exactly the type of weapon regulators have against users of cryptocurrency. This really doesn’t have an effect on people that already have a meaningful amount of money within the crypto realm. However, it has a massive effect on new money entering the system. If there ever were to be a large scale attack on the cryptocurrency industry, I believe fiat onramp services like Binance would be the target. Any company that offers to convert fiat into cryptocurrency is at risk, because they’re providing a service to their customers to take the very action that could put an end to the legacy financial system.
Outlook on BNB and Binance Smart Chain
I don’t expect much to change for users of Binance Smart Chain. For all intents and purposes, it is an independently functioning blockchain that is more or less a cryptocurrency ecosystem that is detached from Binance the company. That being said, public perception can definitely have an effect on the price of BNB. I wouldn’t be surprised if all of this negative press and attention causes people to question their BNB holdings. Alternatively, I could see this new regulation pushing more people to use Binance Smart Chain, instead of the financial services offered on Binance.com. People may be worried about frozen accounts, and regulatory roadblocks on Binance.com, but there is not much that can be done to stop someone from broadcasting transactions on Binance Smart Chain.
I expect some people will dump a portion of their BNB like I have, and others will move their BNB off of the exchange due to fear from the regulators. I took a small chunk of my BNB, and converted it into CRO for reasons that we will explore shortly.
A Note on Binance Smart Chain Tokens I Bought
Earlier in the year, I wrote about some tokens on Binance Smart Chain that I was playing around with. They were CAKE, BAKE, and BTCST. I wanted to provide an update on these tokens because 3 months has passed since I decided to add them to my portfolio. None of them have performed very well during this market correction. I honestly don’t expect them to do very well in the long run either. I’ve parted with the CAKE and 25% of the BTCST. For some reason BTCST stayed high for a couple of days at the beginning of the crash while the rest of the market was falling, so it was a good opportunity to take profits in BTC, which is exactly what I did.
Steady Stream of Good News for Crypto.com
If you’re not paying attention to crypto.com, then I encourage you to do so. They just signed a deal with the UFC (Ultimate Fighting Challenge) as the first official cryptocurrency sponsor of the UFC. This is why that deal they just signed is a genius move on the part of Crypto.com. The UFC has a global viewership/following of about 625 million people. Most of these people are male, and between the ages of 25 and 50. They are typically highly engaged in what they do, and a good chunk of them enjoy gambling (sports betting). This is an ideal cohort of people to go after if you’re looking to aggressively grow your user base. The deal they just signed with the UFC gives them the right to place their branding on athletes, as well as UFC’s staff on the sidelines.
Crypto.com’s recent partnership with Formula1 racing has led to millions of eyeballs reading their name as cars race by.
If you looks closely in the background, there is also a bull; coincidence? I think not.
While Crypto.com’s development updates have slowed and have not been as groundbreaking as of late, their marketing efforts are off the chart. Marketing is clearly where their focus lays right now, but I see this as a good move on their part as their development team works on bringing a host of features to Crypto.org later this year.
This is why I am accumulating CRO on a daily basis. Through my card cashback, through Crypto.org staking, through exchange staking, through the supercharger, and through their upcoming syndicate (MATIC). CRO is honestly kind of a weird token when looking at its price. For the first 8 months of 2020, it rose steadily against most other coins and reached a top 10 position on coinmarketcap. Then it precipitously declined in value around August and has yet to recover. I expect a similar trajectory in the future when two things happen.
Millions of eyes from F1 and UFC view Crypto.com and subsequently search it and get engaged in cryptocurrency
The launch of Crypto.org and their DeFi ecosystem
Crypto.com is Pleasing the Regulators
The last reason I am pulling my investments from Binance, and throwing more into Crypto.com, is because of how much favour Crypto.com has gained with the regulators. Their whole schtick is about security and compliance. I woke up this morning to more news of Crypto.com obtaining the first Electronic Money Institute license in Malta. They are going out of their way to conform to each and every country’s unique set of rules for offering cryptocurrency financial services. They’re collecting licenses faster than countries can come up with them!
Yes, Binance was able to take the world by storm, but are they going to be able to sustain the momentum they’ve generated in the face of this regulatory pushback? My temperament is more aligned with that of Crypto.com’s. That is, take it slow, and make sure that all your paperwork is in order before storming into countries that have strong crypto regulations.
Like it or not, a cryptocurrency company is subject to the will and whim of the government and regulators. Bitcoin is not! But companies still are. When choosing exchange tokens to invest in, it’s important to ask the question of whether or not that company is on the bad side of the regulators.
Centralization of Exchanges
Exchanges perform a vital service for the cryptocurrency industry. It will be quite some time before the world of cryptocurrency can exist entirely without them. We do have an emerging DeFi industry, but in most cases, they operate on the presumption that your money has already been converted into one of the thousands of cryptocurrencies out there.
I’ve been asked before about whether or not cryptocurrency exchanges are counter to the ethos of Bitcoin. They are centralized financial institutions after all. I think there are some people that will appreciate the level of effort Crypto.com is putting into being compliant. On the other hand, there is a strong undercurrent of renegade rebelliousness throughout the cryptocurrency community that is probably closer aligned with the approach of Binance.
It is no trivial thing to convert all of the worlds money into cryptocurrency. That job has to be done slowly, over a grand span of time. I have no illusions that this will take place overnight. Therefore, I fall back onto my previous statement that exchanges perform a vital function. Until we have a thriving peer to peer DeFi ecosystem up and running, exchanges are here to stay, and I am here to invest in them. Exchanges are like the lifeboat that saves us from the sinking titanic that is our global financial system.
Regards,
Keegan
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