Binance Locks USDC Reserves for Stock Put Option Sellers

Binance Collateralizes Put Options with USDC

Binance is now requiring sellers of stock token put options to lock up 100% of the potential payout amount in USDC as collateral, according to a recent update to the exchange’s seller FAQ. This move effectively secures the exchange against potential losses if a put option is exercised.

The requirement applies to stock tokens listed on Binance, allowing users to trade derivatives linked to companies like Apple and Tesla. Put options give buyers the right, but not the obligation, to sell an asset at a predetermined price on or before a specific date. Sellers of these options are obligated to buy the asset if the buyer exercises their right.

Binance’s FAQ explicitly states that sellers must have sufficient USDC available in their accounts to cover the full purchase amount of the underlying asset. The exchange also reserves the right to early assign the option, meaning the seller could be required to fulfill their obligation before the expiration date.

Notably, the terms and conditions linked from the FAQ still primarily describe long-only trading of stock tokens, creating a potential point of confusion for users. This discrepancy has drawn attention within the crypto community, with some observers questioning the clarity of Binance’s communication. The exchange has not yet addressed the inconsistency publicly.

Source: CryptoSlate