The line between investment banks and decentralized finance is blurring fast. For example, Binance (BNB), the organization behind the fourth-largest cryptocurrency, could buy a bank.
Binance CEO Zhao “CZ” Changpeng is considering buying a brick-and-mortar bank, Bloomberg claims. Bloomberg did not say what banks Changpeng is thinking of buying. Zhao thinks a traditional bank could serve as a gateway between traditional finance and decentralized (DeFi), Bloomberg speculates.
Binance (BNB) has the money to buy a bank. It was the fourth-largest cryptocurrency with a $54.854 billion Market Capitalization, a $67.736 billion Fully Diluted Market Cap, and a 24-Hour Market Volume of $11.811 billion on 7 November 2022. They base those numbers on a Circulating Supply of 159.980 billion BNB, a Total Supply of 159.98 billion BNB, and a Maximum Supply of 200 billion BNB.
Investors have a strong interest in Binance. They gave it a $336.25 Coin Price, a $1.811billion Centralized Exchange (CEX) volume, and a $143,036.46 Decentralized Exchange (DEX) volume on 7 October 2022. Binance has the resources to become a bank or an investment bank.
Binance Resembles an Investment Bank
I think Binance (BNB) already resembles an investment bank. For example, Zhao told Bloomberg he considered buying troubled crypto lenders, The Daily Hodl reports. However, Zhao did not identify any of the “embattled crypto lenders.”
Interestingly, Zhao says Binance could spend over $1 billion on investments this year. Binance investedt $200 million in Forbes in February 2022. They made the “strategic investment” to help Forbes go public, Forbes reports.
Similarly, Binance invested $500 million in Elon Musk’s takeover of Twitter (TWTR), The Daily Hodl reports. Zhao told CNBC’s Squawk Box that he wants to support “strong entrepreneurs.” Hence, Zhao is acting and sounding like an investment banker. Thus, I predict Binance could soon become an investment bank.
What Resources does Binance (BNB) have?
Binance (BNB) has resources similar to those of a large investment bank. For example, Binance operates the world’s largest cryptocurrency exchange with a 24-Hour Trading Volume of $76 billion on 5 November 2022.
Binance claims its exchange has 120 million registered users who can trade over 350 listed cryptocurrencies. Those users can build a portfolio at Binance just as you can build a portfolio at an investment bank.
Moreover, Binance is building what they call a contactless, borderless, and secure cryptocurrency payment infrastructure they call Binance Pay. They claim users can send and spend crypto with no fees. They claim you can make payments in over 70 cryptocurrencies at lightning-fast speeds with Binance Pay.
They are also building a Binance Marketplace to integrate Binance with e-commerce. The Binance Marketplace offers peer-to-peer (P2P) bank transfers, a digital wallet, blockhain broadcasts, Gaming Gift Cards, and Mobile Pone-Top up from hundreds of providers. Users can also book hotel rooms and through Travala and buy games, gift cards, and vouchers and pay bills through Uquid Digital Shop on the Marketplace.
Binance Earn allows users to earn by staking popular coins. Thus Binance already offers a wide variety of financial services. Hence, I argue Binance is already in the banking business.
Binance and Binance USD (BUSD)
Moreover, Binance is conducting US dollar transactions through its Binance USD (BUSD) stablecoin. Binance claims BUSD had 5.5 million users and a $22.5 billion Market Cap on 7 November 2022.
Moreover, Binance USD resembles a bank account. For example, they claim BUSD could pay an annual percentage rate of up to 8% on 7 November 2022. Plus, they claim they back BUSD with full segregated bankruptcy remote assets. That sounds like a bank.
In September 2022, they claim Binance USD had $22 billion in net assets. Those assets comprised $5.34 billion US Treasury Debt, $14.32 billion in US Treasury Collateralized Repurchase Agreements, and $1.59 billion in cash deposits. That also sounds like a bank.
What Value Does Binance USD (BUSD) offer?
Plus, they claim BUSD holders can deposit BUSD in Binance Savings for an annual return of up to 10%. That sounds like a savings account or a money market account. The only thing BUSD lacks is Federal Deposit Insurance Corporation (FDIC) deposit insurance. BUSD could offer FDIC insured accounts if it buys a US bank.
Moreover, BUSD was CoinMarketCaps’s seventh-ranked cryptocurrency with a Market Capitalization of $22.548 billion, a Fully Diluted Market Cap of $22.545 billion, and a 24-Hour Market Volume of $9.142 billion on 7 November 2022. Furthermore, BUSD had a Centralized Exchange (CEX) Volume of $9.035 billion, and a Decentralized Exchange (DEX) Volume of $51.143 billion on 7 November 2022.
They base numbers on a Circulating and Total Supply of 22.544 billion BNB. Plus, Binance USD (BUSD) is a rare stablecoin that offers stability. CoinMarketCap gave it a 9$1 Coin Price on 7 November 2022.
Stablecoins are often unstable because they are cryptocurrencies with a built-in smart contract. The smart contract is a digital mechanism that pays in a fiat currency from a bank account or a DeFi payments system when you spend the stablecoin. For example, Binance USD makes payment in US Dollars.
The US Dollar is the world’s reserve currency. A reserve currency is the fiat currency that banks, international institutions, corporations, and other entities conduct international business in. Hence, you could use Binance USD to facilitate international trade.
Is Binance a Tech Company?
I think Binance could become a major player in FinTech through its Binance Smart Chain blockchain or BNB Chain. They call the BNB Chain a “decentralized economy.”
The Binance Smart Chain serves an operating system for decentralized apps (DApps). The DApps conduct business on the Smart Chain. BNB Chain allows users to build DApps with the most popular programming languages. Plus, the Smart Chain is compatible with the Ethereum Virtual Machine (EVM).
The EVM is the digital computer that runs the Ethereum blockchain. A DApp needs access to the EVM to run on the Ethereum blockchain and process Ethereum transactions. Thus Binance DApps can accept Ethereum (ETH) and Ethereum Request for Comment (ERC-20) token payments.
Binance BNB (BNB) is the BNB Chain currency, so it is the currency of Binance’s decentralized economy.The BNB DApps conduct business in BNB.
Binance is a FinTech Company
Popular Binance DApp games include MOBOX: Farmer, era7, Gameta, FiteApp, Defina, and Zillion AAKAR XO. DeFi apps on Binance include Pancake Swap, ApeSwap, SushiSwap, Biswap, AutoSharkFinance, Cream Finance, Valas Finance, Libero Financial, dForce, Wombat, and Meason. Exchanges you can access in Binance include Bogged Finance, Transit Swap, DODO, and ARKEN Finance. You can access all these DApps and many more through DappBay.
These DApps can scale with BNB Sidechain. To explain, a sidechain is a shortcut between blockchains that increases the speed and volume of blockchain constructs. Sidechains allow apps to work on multiple blockchains. They claim the BNB Sidechain enables a high volume of transactions per second (TPS) to power e-commerce.
Finally, Binance offers an MVB V Accelerator Program. The program finances DApps and blockchain projects and offers them access to the resources of Binance Labs. This program functions as an incubator for infrastructure, DeFi, GameFi (Game Finance), SocialFi (Social Finance), and Metaverse projects built on the BNB Smart Chain.
Banking and FinTech come together
Thus, I consider Binance, a FinTech company that is evolving into an investment bank. Therefore, Binance is part of a growing trend of investment banks and FinTech integration.
This trend of investment banks becoming FinTech companies extends far beyond Binance. For example, Goldman Sachs (GS) America’s most prominent investment bank employed around 9,000 engineers in 2018, CNBC estimates. Engineers made up a quarter of Goldman Sachs’ employees in 2018.
Thus, Goldman Sachs (NYSE: GS) is becoming a FinTech company just as Binance is becoming an investment bank. Hence, investors and speculators who want to profit from FinTech need to investigate Binance.
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