Binance, the world’s largest cryptocurrency exchange by trading volume, has announced a new update to its peer-to-peer (P2P) risk management system in an effort to protect its users. According to the exchange’s announcement, the move to improve P2P security is necessary because the trading platform saw a surge in user growth in the first half of the year.
The most significant changes are the addition of new requirements to the buy and sell advertisements on Binance P2P. This is intended to reduce all low-quality, inactive, or untrustworthy advertisements by up to 99 percent. The exchange also confirmed that it has improved its matching logic to ensure that traders are only paired with trusted traders and verified merchants. The company stated in a joint announcement:
“Binance P2P welcomed more users than ever in the first half of 2021, growing by 10X to more than 1M active users on a weekly basis. When it comes to ensuring that all of our users have a safe and secure experience, we take our responsibility seriously. We hope to welcome even more users to the world of crypto by securing our platform with industry-leading security measures and proactively launching user-education initiatives to maximize awareness of best practices.”
Overall, Binance claims to have implemented a T+1 withdrawal limit in some of its markets to protect users’ funds, as well as improved its algorithms to detect suspicious activity on the platform quickly and limit the trading activities of potential bad actors.
P2P platforms are easily infiltrated by malicious actors, tainting customers’ trading experiences. Users in countries where cryptocurrency-related activities are prohibited, such as Nigeria, rely on the Binance P2P trading experience, and the upgrade will better serve this growing market niche.
Is the P2P Risk Upgrade a Form of Regulatory Nudge?
Binance has recently come under the scrutiny of several regulatory authorities around the world. Aside from the widespread bans on the exchange in major crypto hotspots such as the United Kingdom, Hong Kong, and South Korea.
The cryptocurrency exchange had recently suspended all trading pairs involving the Korea Won. Furthermore, the exchange discontinued all P2P merchant applications and Korean Language support, as well as the Korean Won-backed payment option.
The moves are all part of the exchange’s effort to get back on track with regulators, a longer-term goal that may require the firm’s Chief Executive Officer, Changpeng Zhao, to step down.