Binance launches pre-market spot trading service with 'actual tokens'

Binance has launched a pre-market spot trading service, enabling users to take early positions before a token's spot market listing.

"Binance is the only crypto exchange to offer pre-market spot trading whereby tokens will be exclusively allocated and generated for users to hold and trade in the pre-market on the Binance platform," the exchange said Wednesday.

While other crypto exchanges offer pre-market trading, they typically facilitate the trading of derivatives, whereas Binance is "the first exchange to have actual tokens for users to trade during pre-market," a Binance spokesperson told The Block.

Binance rival Bybit also offers a pre-market spot trading service, but it appears to effectively use derivatives rather than actual tokens. Bybit's website states: "Both buyers and sellers will have to collateralize their assets on the platform, serving as a guarantee for timely settlement. The collateral will be returned upon successful and timely settlement. All transactions are denominated in USDT," suggesting collateral is held while awaiting token delivery.

Coinbase International's "pre-launch markets" service, on the other hand, involves trading perpetual futures contracts for tokens that are yet to launch. "Once the underlying token is launched on relevant spot exchanges, these contracts seamlessly transition into standard perpetual futures contracts," Coinbase said recently.

How does Binance Pre-Market work?

The Binance Pre-Market service is a joint effort between Binance Spot and Binance Launchpool, which allows users to acquire new project tokens by staking BNB and other tokens.

Only selected Binance Launchpool tokens will be available for pre-market trading. Currently, Launchpool tokens are held by users until the official spot listings on Binance. With Binance Pre-Market, users can trade these tokens after the Launchpool distribution is completed, subject to restrictions such as withdrawal, transfer and deposit limits until the official listing, the spokesperson said.

Binance will announce when a Launchpool project is available for pre-market trading and its start date. Users can continue subscribing to Launchpool as usual. Once pre-market trading begins, all Binance users can trade the "pre-market" tagged tokens. Binance said the pre-market period will close at least four hours before the official spot trading, with a separate announcement for the listing.

Binance Pre-Market is unavailable in certain regions, including the U.S., Canada, Dubai, Japan, the Netherlands, Russia and Spain.