Crypto traders are showing pessimism in the derivatives market for the embattled crypto exchange Binance’s native coin BNB amid the growing regulatory turmoil. The open interest-weighted funding rate turned negative on Binance’s BNB coin this weekend, as per Coinglass data. The negative open interest means that traders betting on a price decline are willing to pay those who are waiting on gains to keep their bearish positions open on the cryptocurrency. The world’s largest crypto exchange in terms of trading volume has been under heavy regulatory scrutiny lately.Regulators from Australia, Europe to the US have all been tightening their grip on the crypto exchange. Binance and its CEO Changpeng Zhao are facing the most serious accusations, including mishandling users' funds and lying to financial regulators, by the US Securities Exchange Commission (SEC).Open Interest of BNB Perpetual Swaps Crosses $460 MillionNegative open interest rate in the perpetual swap market reflect the traders’ growing pessimism on exchange’s token. Perpetual swap market is a type of futures contract used in crypto markets that do not expire. As per the data on Coinglass, the open interest of BNB on perpetual swaps has crossed $460 million. The chief investment officer at crypto investment firm LedgerPrime,Shiliang Tang, told Bloomberg that BNB trade seems like a “very short-term bet,” since speculators are paying a steep fee to keep positions open.“There’s no real way to borrow spot BNB,” he added.Tang also pointed out that it is very hard to short BNB on the spot market due to lack of liquidity.BNB, the fifth largest cryptocurrency in terms of market cap, is currently changing hands at just above $239, nearly 2% down in the last 24 hours. BNB briefly jumped to $260 on July 14 when most altcoins rallied after the landmark ruling in the Ripple lawsuit against the SEC. Binance Continues To Face Regulatory ScrutinyThe US SEC filed a lawsuit against the exchange last month and accused the firm and its CEO of running an illegal exchange, broker-dealer and clearing agency in the United States.The financial watchdog also accused Binance of misrepresenting trading controls.The lawsuit claims that CZ and Binance used a web of firms to control Binance.US’s funds. The crypto exchange giant has denied all accusations made by the SEC.The increased regulatory scrutiny initiated by the US regulators has also prompted many banking partners to withdraw their support from Binance amid uncertainty, limiting the exchange’s ability to deposit and withdraw fiat money on the exchange. Binance is not alone in facing regulatory heat in the US, Coinbase, the largest US-based exchange, is also embroiled in a legal battle with the SEC that could define the future of the crypto industry in the country.
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