Binance announced on Wednesday that it is implementing stricter regulations for cryptocurrency issuers and liquidity providers on its platform, following criticism of the digital asset market's practices during the October market crash.
The world's largest cryptocurrency exchange said in a blog post that crypto projects are now prohibited from having revenue-sharing models with market makers. Market makers are also prohibited from dealing with projects to manipulate prices or distort cryptocurrency liquidity. Binance said it will take "swift and decisive action against any misconduct," including blacklisting market makers.
"We are committed to ensuring transparency and integrity across the crypto industry," Binance stated in its blog post. "Protecting our users and maintaining a fair and trustworthy trading environment comes first."
Cryptocurrency exchanges have faced increasing scrutiny since the October 10 crash, which wiped out $19 billion in leveraged bets. The broader digital asset market has yet to recover from the crash.
Under the new rules, cryptocurrency projects must report details, legal entities, and contract terms of the market makers they work with to Binance.
Binance has identified six warning signs of manipulative market-making behavior. These include a pattern of persistent sell orders without corresponding buy activity and coordinated deposit and sale activity of cryptocurrencies across different cryptocurrency exchanges.
In January, Changpeng “CZ” Zhao, Binance’s co-founder and former CEO, said that accusations that the platform was responsible for the cryptocurrency market crash last October were “far-fetched.”