Cryptocurrency exchanges are digital marketplaces where investors can buy and trade various cryptocurrencies. Generally, crypto assets are not sold through brokerage firms or traditional banks. Instead, you must establish an account with a cryptocurrency exchange to purchase cryptocurrencies.
There are currently about 600 cryptocurrency exchanges worldwide, not all of which are accessible to investors in the United States. This article will look at two of those exchanges: Binance and Crypto.com.
Which Is Better?
If you’re in the United States, Crypto.com is probably the best choice since the full Binance is not available to U.S. investors. However, we will examine many other factors about the two exchanges and decide which is better if we leave the U.S. prohibition aside.
Now that we know something about crypto exchanges, we can consider whether Binance of Crypto.com is the better exchange.
Advantages and disadvantages of Binance include the following.
The most critical factor about Binance for U.S. investors is that Binance may not do business with U.S. customers.
Background Information on Binance
Initially organized in China by Changpeng Jhao, Binance is the largest cryptocurrency exchange in the world with a market capitalization in the billions; Coinbase is giving it intense competition for this title. It is currently registered and headquartered in the Cayman Islands. Since 2021, Binance has been a target of investigations by both the United States Department of Justice and the Internal Revenue Service on allegations of money laundering and tax offenses. The United Kingdom’s Financial Conduct Authority ordered Binance to stop all regulated activity in the United Kingdom in June 2021. In 2019, Binance announced that it had been the victim of a major hacking attack in which some $40 million in cryptocurrency was stolen. The exchange shut down deposits and withdrawals for about 12 days but allowed trading to continue. Finally, although the exchange has raised significant money for Ukraine in the recent conflict, it has refused to cooperate with sanctions against Russian participants in its markets, citing financial freedom.
Binance has developed two cryptocurrencies of its own, the Binance Coin (BNB), launched in June 2017, and Binance Smart Chain (BSC), launched in September 2020.
The United States– In 2019, Binance was banned in the United States for regulatory reasons. As a result, Binance and other investors launched Binance.US, a separate exchange registered with the United States Financial Crimes Enforcement Network. They intended to comply with all applicable US laws and regulations. The US exchange has been praised for being very similar to its worldwide counterpart. However, it is banned in Hawaii, Idaho, Louisiana, New York, Texas, and Vermont. In May 2021, Bloomberg News reported that Binance was under investigation by the United States Department of Justice and the Internal Revenue Service for money laundering and tax evasion. Aside from China and the United States, Binance is also generally banned in the United Kingdom, Japan, and Thailand. It has, however, worked with the governments of Malta, Jersey, and Bermuda to sign Memoranda of Understanding to do business in those jurisdictions.
Binance offers trading in more than 600 cryptocurrencies, while Binance US offers approximately 80 cryptocurrencies for trading by U.S. customers. It currently has some 90 million customers and claims to charge the lowest transaction charges of any cryptocurrency exchange. All trading must be done in cryptocurrencies, so investors must own or purchase cryptocurrencies before engaging in any transactions on the exchange.
Opening an account with Binance is simple. An investor must fund the account, provide the Know Your Customer information, verify their identity, and begin trading. It is somewhat more challenging to establish a Binance US account, with multi-factor identification and extensive KYC information required. Both provide valuable services, such as dollar-cost averaging through automated purchase systems and low-cost transaction fees.
Binance offers services in trading, listing, fundraising, and de-listing or withdrawal of cryptocurrencies. Cryptocurrency traders seeking to launch their own tokens can use Binance for raising funds through initial coin offerings (ICOs).
Regulatory Issues in the U.S.
Somewhat recently, President Biden issued an executive order (Biden Order) requiring the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), along with the primary banking regulators, to work together to propose a regulatory scheme for cryptocurrencies. The SEC has long argued that cryptocurrencies are securities, while the CFTC takes the position that they are commodities and therefore appropriately regulated by the CFTC. The Biden Order recognizes that both positions have merit and directs the parties to create a joint regulator with features and personnel of both agencies to oversee and regulate cryptocurrencies. There is a mishmash of overlapping regulations, and most firms selling cryptocurrencies have been registering as money transmitter businesses under state law.
Like Binance, Crypto.com is not currently available to U.S. investors. The exchange offers easy account opening, deep liquidity, and low fees.
The CRO token is Crypto.com’s native token. An ERC20 token on the Ethereum blockchain, the CRO provides users with access to numerous tiered benefits within the Crypto ecosystem, whose goal is promoting mass cryptocurrency adoption. Crypto.com will give its users the ability to buy and sell with fiat currency and debit cards, along with trading, lending, and borrowing. It also features its own noncustodial wallet.
Cronos (CRO) is the native cryptocurrency token of Crypto.com Chain — a decentralized, open-source blockchain developed by the Crypto.com payment, trading, and financial services company.
Crypto.com is making news worldwide for things like rebranding the Staples Center in Los Angeles, California, as the Crypto.com Arena, cutting deals to unite Crypto.com with the Los Angeles Lakers and LA Kings, and introducing Matt Damon as the face of a Crypto.com ad campaign. These partnerships should increase brand recognition and boost excitement around the network. Crypto.com’s new campaign has cost more than $100 million and is slated to air in nearly two dozen countries. Its theme, “Fortune Favors the Brave,” builds on the idea of people achieving greatness through the pursuit of their dreams. And since the launch of “Fortune Favors the Brave,” the CRO has captured the global imagination.
Although the campaign has proven to be catnip for investors, the ads alone are not solely responsible for the steadily increasing price of the CRO. Crypto.com might be the leader in crypto marketing, but there’s significant substance behind the ads. The company specializes in assets with increasing values, providing investors with new opportunities that include:
- The CRO and NFTs (non-fungible tokens) granting investors a stake in the platform.
- Metal Visa Cards with cashback options
- Investment opportunities with up to 14.5 percent interest rates
- DeFi protocols that pay interest
- Swaps and farming; farming is the process of using decentralized finance (DeFi) to maximize returns. Users lend or borrow crypto on a DeFi platform and earn cryptocurrency for their services. Yield farmers who want to increase their yield output can employ more complex tactics.
So, Which Is Better?
In deciding your personal winner in Binance vs Crypto.com, you should consider the following factors.
Cryptocurrencies Traded – Binance is the winner on this issue, offering trading in more than twice as many cryptocurrencies as Crypto.com offers.
Use by Newbies – Generally, Crypto.com provides more assistance and access to beginners than Binance.
Their Own Token – There is no winner here as each has its own proprietary token.
Deposits & Withdrawals – Both exchanges make it relatively easy to deposit funds in various traditional ways, including debit and credit cards, ACH transfers, and wire transfers. As for withdrawals, however, Binance wins in that it allows for withdrawals by several banking methods, while Crypto.com only permits withdrawals in crypto.
Ease of Use – Both offer similar dashboards for trading. Crypto’s interface is easier for beginners, while Binance’s is more sophisticated and allows the seasoned trader to do more. In the end, Crypto’s interface is friendly and more easily usable by more investors.
Security – Binance was hacked as recently as 2019 when thieves stole 7000 bitcoins. Crypto.com, on the other hand, has never been hacked and uses multi-factor authentication and techniques to prevent phishing.
Costs – There is no clear winner on this issue, with the fees being overall virtually the same.
On-Boarding – Crypto.com is faster and easier to join. However, Binance allows access levels if the customer provides more KYC documents. Though we give this round to Crypto.com for ease of on-boarding, if an investor needs sophisticated services, Binance may be more helpful.
Extras – Crypto offers a metal VISA card with a high cashback award system. Binance has nothing like this.
What Constitutes “Better” for an Exchange
Many issues go into deciding which cryptocurrency exchange is better than another. First, investors will want to know which currencies they can trade on a given exchange and how many of them there are. In addition, the costs of trading will also be high, since trading costs directly impact the profitability of any investment. The efficiency with which trades are executed on an exchange is also important. An investor seeking to arbitrage small, frequent price changes will not be interested in trading on an exchange whose slow and cumbersome trading process.
Types of Crypto Exchanges
There are currently three types of cryptocurrency exchanges. They are:
A centralized cryptocurrency exchange (CEX) is a digital place where buyers meet sellers on some centralized platform where the staff of the exchange your crypto and is responsible for it. The centralized exchange will usually provide order books for your trades and may even offer technical analysis tools in some advanced cases.
The most significant advantages of centralized exchanges are that they are easy to use and offer great riser interfaces (UI), user experiences (UX), and quick response. In some of them, you register with your email address, write down your password, and you can trade. UI generally refers to the interaction between users and the exchange’s computer systems, software, and trading applications. UX refers more generally to a user’s overall experience with a specific exchange brand, product, or service.
CEXes often offer customer support, various trading pairs, and fiat gateways. Investors can usually benefit from additional services such as staking (a type of transaction verification), savings opportunities, and access to IEOs (Initial exchange offers). Some may offer decentralized finance (DeFI) services like lending or borrowing crypto, but without a middleman.
On the other hand, an investor uses a CEX, the investor is not the owner of the private keys, so there remains a risk that the CEX can be hacked, as happened with Mt. Gox, HitBTC, or Coincheck. Some people feel uncomfortable sharing their private data in the Know Your Customer (KYC) process, which might be a barrier for some people.
Centralized exchanges tend to be registered and licensed with one or more governments and have been banned in some locations. Coinbase is the most well-known U.S. exchange.
The most popular centralized exchanges are Binance, Coinbase, and Huobi. Crypto.com is also a centralized exchange.
A decentralized exchange is simply a service platform allowing investors a location to trade their crypto assets. A decentralized exchange has no central point of failure and no company in charge of the assets. Compared with traditional CEX, the transactions and trades are automated using smart contracts and decentralized applications. A decentralized change is much more secure because there is no possibility of a security breach if the smart contract is well written.
Most EXes are based on using Ethereum and its smart contracts. Most cannot even handle Bitcoin for trading. This limitation might be upgraded by using decentralized finances (DeFi) on an interoperable platform such as Polkadot and Cosmos. Also, because of their diffuse nature with no central operating company, DEX exchanges are not licensed or registered with any government and are much harder to monitor or shut down than centralized exchanges. Unfortunately, the price for decentralization is low trading volume, limited liquidity, slower speeds, and poorer user interfaces making them harder to use.
The most well-known decentralized exchanges are Binance DEX and Uniswap.
A hybrid cryptocurrency exchange takes advantage of both CEX and DEX features. A hybrid combines the fast transaction speed you can find in centralized platforms with the security assurance provided when investors still hold private keys. Hybrid exchanges are the new generation of the crypto trading marketplace and are still under development.
The most popular hybrid exchanges are Nash exchange and Qurrex exchange.
And the Winner in Binance vs Crypto.com Is…
It really comes down to what an investor needs. Different trading strategies require different sets of tools.
If you are looking for an easy way to buy and trade crypto with a credit or debit card, Crypto.com is an excellent option. However, if you want to perform high-frequency trades and strategies that require high levels of liquidity across a variety of markets, Binance offers the best choice.
Keep in mind that if you’re in the USA, both Crypto.com and Binance are more limited. For Crypto.com, you can only use the app (not the entire exchange), and for Binance, you can only use the much more limited Binance.us. Neither of these is all that much of a winner.
For Americans, the Crypto.com vs. Binance.us debate might come back to that killer CRO debit card. Binance.US doesn’t have anything that can compete with it. In the end, however, fees are generally less on Binance.US. Once again, what is essential to the given investor is what makes this decision.