The new Binance guidelines for market makers requires them to disclose information such as their identity and contract terms.
Binance Tightens The Grip On Market Makers
On Wednesday, the largest centralized crypto exchange in the world released a new set of guidelines aimed to token issuers and liquidity providers, tightening their grip on the mandatory disclosure of market maker identity and legal entity and contract terms. Additionally, Binance is posing an explicit ban on profit‑sharing and guaranteed‑return arrangements.
In their blog post, Binance clarifies that a market maker is a professional trader or firm that provides liquidity by always placing buy and sell orders on a CEX or DEX. They earn money from the small difference between their buy price and sell price (the spread). In return, the liquidity they provide help other traders get in or out of positions quickly without moving the price too much.
Top 3 Red Flags That Market Makers Should Look For
Binance highlights ix “red flag” behaviors, including aggressive sell‑offs against vesting schedules, one‑sided order books and coordinated cross‑platform dumping
1. Selling against the vesting schedule
Market makers are expected to stick to the token’s agreed vesting and unlock plan. If they start offloading large amounts too early, too often, or in a way that clearly clashes with that schedule, it’s a sign incentives are off or internal risk controls are weak.
2. One‑sided “liquidity”
Effective market making is supposed to provide balanced liquidity on both sides of the book. When you see sustained sell orders with little or no matching buy interest from the same party, it can add downward pressure on price and disrupt orderly trading conditions.
3. Coordinated dumping across venues
When big token transfers hit several exchanges at once and are quickly followed by heavy selling that goes beyond routine liquidity rebalancing, it’s often a clue that tokens are being systematically offloaded, not just responsibly warehoused for market making.
More Illicit Activity
Binance warns that market makers should also watch out for volume that doesn’t match price, volatility spikes from thin liquidity and large‑scale token offloading. The new expectations for token projects are clear: strict adherence to token release plans, no large offloads via market makers, full disclosure of MM identities and mandates to the exchange, clear written trading parameters, and continuous monitoring post‑listing.
Banned activity includes revenue‑sharing/profit‑sharing models, guaranteed‑return deals between projects and market makers and vague token‑lending agreements that don’t clearly limit how borrowed tokens can be used.
The goal of the new rules is to ensure their market-making arrangements are aligned with “long-term market integrity”, as responsible market makers ultimately boost liquidity and “reduce slippage”. Binance warns it will take swift action against violations of the guidelines, including blacklisting market makers that manipulate markets or violate token release schedules.
Market Implications Of The Binance Guidelines
Binance is effectively admitting that “liquidity support” has doubled as unofficial selling channels and volume‑washing tools, and is trying to pre‑empt both another crash narrative and tougher external regulation. The potential winners of the new rules are retail traders who get cleaner order books and fewer surprise dumps on newly listed tokens, plus more transparent token‑launch structures.
The likely losers, however, are smaller token issuers and aggressive market makers who relied on off‑the‑record guarantees or profit splits to juice volume and unlock liquidity.
The practical takeaways for traders are the obvious: watch order‑book depth and slippage instead of headline volume, be cautious around early‑stage altcoin listings while market makers and issuers adjust, and expect some pairs to see thinner liquidity as aggressive players step back.
If Binance really enforces blacklisting and reporting channels, the cost of “liquidity games” rises, which could reduce short‑term pumps but improve long‑term price discovery on the exchange.
Cover image from Perplexity, BTCUSD chart from Tradingview
