Key Takeaways
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- Binance has banned revenue-sharing arrangements between crypto projects and their market makers, and prohibited market makers from coordinating with projects to manipulate token prices or distort liquidity.
- The new rules follow criticism of exchange practices during the October 2025 crash, which wiped out $19 billion in leveraged bets and triggered a retail exodus that has yet to fully reverse.
- Binance now requires crypto projects to disclose the identity, legal entity, and contract terms of any market makers they engage — adding a layer of transparency previously absent from token trading.
- The exchange identified six red flags signaling manipulative market-making behavior, including persistent one-sided sell orders and coordinated deposit-and-sell activity across multiple exchanges.
What Happened?
Binance, the world’s largest cryptocurrency exchange, published new rules this week tightening oversight of token issuers and liquidity providers on its platform. The policy prohibits revenue-sharing models between crypto projects and their market makers — arrangements critics say create incentives to prop up token prices artificially rather than provide genuine liquidity. Market makers are also barred from coordinating with projects to manipulate prices. Binance said it will take “swift, decisive action against any misconduct,” including blacklisting violators. The move comes after the October 2025 crypto market crash, which erased $19 billion in leveraged positions and drew criticism from prominent traders, including DRW’s Don Wilson, who accused certain exchanges of failing to serve as neutral trading venues during the meltdown.
Why It Matters?
Market makers play an outsized role in crypto compared with traditional financial markets because most tokens lack the organic buying and selling pressure that naturally keeps prices stable. When market maker incentives are misaligned — as revenue-sharing arrangements can create — it can lead to artificial price support followed by sudden collapses that devastate retail investors. Binance’s new disclosure requirements and conduct rules represent a meaningful step toward the kind of market structure transparency that regulators and institutional investors have long demanded. For the broader crypto market, the credibility of exchanges is a critical variable: Binance has already seen its market share begin to erode to decentralized venues like Hyperliquid, which compete partly on transparency. If these rules are enforced consistently, they could help restore retail investor confidence — still shaken from October’s crash — and support a recovery in small-cap token markets.
What’s Next?
The real test is enforcement. Binance’s track record on self-regulation has faced skepticism, and former CEO Changpeng “CZ” Zhao previously dismissed accusations that the exchange bore responsibility for the October crash as “far-fetched.” Whether the new conduct rules will be applied rigorously — or whether they serve primarily as a reputational response to public criticism — remains to be seen. Investors should watch for whether other major centralized exchanges follow with similar policies, whether decentralized exchanges like Hyperliquid continue to gain market share at Binance’s expense, and whether regulatory bodies in the U.S. and EU cite these rules in upcoming crypto market structure legislation. A sustained recovery in altcoin markets will likely depend on whether trust in exchange-level market integrity can be credibly restored.
