Binance Sells Gold Insurance Retail Can Buy but Never Write

The European-style contracts, offered through Nest Exchange Limited, Binance's Abu Dhabi Global Market (ADGM)-regulated venue, let retail customers buy calls and puts on both metals. What retail cannot do is write them. Selling options, and collecting the premium buyers pay, is reserved for designated market makers whom Binance has not named.

There is a defensible logic to the restriction. Writing options carries unlimited downside, and retail traders blowing up short-option positions is a story as old as derivatives. Capping retail losses at the premium paid is the kind of guardrail regulators tend to applaud. But the same design means every premium dollar in this market flows in one direction: from Binance's customers to Binance's chosen counterparties. The exchange has not said who those counterparties are, what they earn, and how they were selected.

Every ounce is a Tether

No one in this market ever touches metal. The contracts settle in USDT and price against a composite benchmark drawn from multiple third-party data vendors, meaning every gold position is, mechanically, a stablecoin position that tracks gold. The design keeps capital that might otherwise leave for a commodities broker circulating inside crypto rails, and adds another use case for a stablecoin whose issuer profits from every dollar of demand.

The options extend a franchise that has grown faster than almost anything else on the exchange. Binance's TradFi perpetuals, which went live in January with gold and silver, grew from about $3bn to $8.6bn in average daily volume between January and March, according to Binance Research, giving the exchange roughly 41% of all TradFi perpetual trading. Options are the classic second act once a futures book is deep enough to hedge against, and metals options of this kind are a first among the major crypto venues.

"The launch of TradFi Perpetual Contracts marks a key step in bridging traditional finance and crypto innovation," Jeff Li, Binance's vice-president of product, said when the perpetuals debuted in January.

The regulator is also a shareholder

The venue's oversight arrangement deserves more attention than the product itself. Nest Exchange operates under ADGM's Financial Services Regulatory Authority, the authority Binance CEO Richard Teng ran before joining the exchange. Last year MGX, an Abu Dhabi state-backed investment group, made a $2bn investment in Binance, among the largest in the industry's history, deepening an embrace that has made the emirate Binance's governance centre. The jurisdiction supervising a market in which retail can only buy has a sovereign shareholder invested in that market's operator.

None of this is hidden, and none of it is illegal. It is simply the shape of the deal: 24/7 metals exposure, settled in a private company's stablecoin, on a venue whose regulator's home government part-owns the house, in a market where the house decides who gets to collect.

Binance responds

A Binance representative responded to Sandmark's questions on market makers, earnings from the arrangement and the potential for retail options writing in the future.

Binance said it publishes eligibility criteria for market makers rather than naming them, an open, volume-based application process rather than a closed selection, though who currently holds the role stays undisclosed. On revenue, Binance said it earns from trading fees, not the market-making arrangement, and that a promotional 0% maker and 0.02% taker rate has applied to the gold and silver options since launch. That answers what Binance earns. It does not answer what its market makers collect in premium, the sharper half of the original question.

On retail eventually being allowed to write options, Binance said only that it would weigh demand, market conditions and retail suitability. No timeline was given.