Crypto Giants OKX and Binance Tighten the Reins on VIP Fee Abuses

OKX, the second-largest cryptocurrency exchange, has recently requested additional information from key trading firms about their clients. This move aims to prevent the misuse of a VIP fee program, where brokerages combine clients’ orders to benefit from lower trading fees.

In a letter reviewed by CoinDesk, OKX asked prime brokers to provide details of subaccounts, including the names of the entities or individuals controlling each subaccount and their respective jurisdictions. The exchange set a deadline of July 17 for this information. The letter warned that failure to comply could result in the restriction or closure of undisclosed subaccounts.

This initiative by OKX follows a similar action by Binance, the largest crypto exchange by volume. Earlier this month, Binance revised its Link Plus interface to close a loophole that allowed prime brokers to use a multi-tiered fee system to offer rebates to clients. Binance’s move was aimed at maintaining compliance and ensuring fairness for all users, whether they accessed the exchange directly or through intermediaries. This change was initially reported by Bloomberg.

Cryptocurrency exchanges offer discounted trading fees to their largest customers, treating them as VIPs to encourage their continued business. Prime brokerages, which provide trading services to professional and often large investors, can theoretically consolidate several clients’ trades through a single account to qualify for these lower fees. This practice is what OKX is attempting to dismantle, according to an anonymous source familiar with the prime brokerage industry.

OKX declined to comment on the matter. Meanwhile, Bybit, another major crypto exchange, is closely monitoring the situation but currently has no plans to alter its fee structure. Eugene Cheung, Bybit’s head of institutions, emphasized the firm’s commitment to compliance and the best interests of its users.

Overall, this crackdown by OKX and Binance highlights the ongoing efforts within the cryptocurrency industry to ensure fair trading practices and regulatory compliance, particularly concerning VIP fee programs and prime brokerage activities.

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