A Crypto Trading Clampdown Expands Beyond Binance to Another Large Exchange

Cryptocurrency exchanges appear to be cracking down on who can take advantage of the discounted trading fees they offer to their biggest customers.

OKX, the world’s second largest exchange, has requested more information from leading brokerages following changes at its rival Binance.

Cryptocurrency exchanges are putting pressure on brokers that offer lower VIP trading fees by aggregating their clients’ orders.

In a letter reviewed by CoinDesk, OKX, the second-largest exchange by volume, recently requested details of sub-accounts from primary brokers, including the names of the entities or individuals controlling each sub-account and the jurisdiction they are located in. OKX said the information is needed by July 17.

“Failure to do so may result in restrictions on trading of undisclosed sub-accounts and/or closure of sub-accounts,” the letter said.

Earlier this month, OKX’s larger rival Binance changed its Link Plus interface, effectively closing a loophole that allowed primary brokers to use a multi-tiered fee system to offer refunds to their clients. Binance said the measure was to “preserve compliance and ensure a level playing field for all users, whether they access Binance directly or through an intermediary.” The news was first reported by Bloomberg.

Exchanges treat their biggest clients like VIPs by offering them discounted trading fees to increase the likelihood that they will stick around. Prime brokerages (firms that provide trading services to professional, usually large, investors) could theoretically route trades for several clients through a single account at an exchange and qualify for these low fees.

“This is mostly done to spread clients across brokers and price them separately,” said one person close to the prime brokerage industry, who asked not to be identified.

OKX declined to comment.

“We have been closely following recent developments with other platforms removing their primary brokerage multi-tiered fee structure,” said Eugene Cheung, chief institutional officer at Bybit, another major cryptocurrency exchange.

“However, we do not plan to make any changes to our fee structure. We remain committed to ensuring compliance and the best interests of our users,” Cheung said in an email.