The Breakdown - Binance Needs A Friend in The European Union

Episode Date: June 29, 2026

Binance is out of the EU as of July 1 after its MICA license application in Greece was rejected. David runs through who is and isn't licensed under MICA, checks Blockworks Research for Binance's actual spot market share (~33%), and looks at whether the outflow data suggests real damage. Then: the US government is now effectively approving AI model releases — Anthropic's Mythos 5 is live for a whitelist of 100+ orgs, Fable 5 still blocked, and OpenAI just did the same thing with GPT-V.Sol. David draws the parallel to how regulation changed crypto. Finally: Meta is building a prediction market app called Arena, with Zuck reportedly pursuing partnerships with Polymarket and Kaoshi. David checks Polymarket and Kaoshi's open interest data and asks whether Meta is just late to the party again. TIMESTAMPS: [To be filled in] FOLLOW THE SHOW › David — https://x.com/dcanellis › The Breakdown — https://x.com/TheBreakdownBW › The Breakdown Newsletter — https://blockworks.com/newsletter/the-breakdown DISCLAIMER As always, remember this podcast is for informational purposes only, and any views expressed by anyone on the show are solely their opinions, not financial advice.

Welcome back to the breakdown, everybody. I'm your host, David Kinais, as always. This morning, we're looking at a few quick stories that are hanging around from last week that are yet to be resolved. We chatted a lot about strategy in Sailor and Bitcoin last week, but there's a lot of other things happening in crypto that warrant some attention. Number one, we're looking at Binance versus the EU and its quest to be regulated under the mica set of rules and regulations for exchanges and VASPs, as they like to be called in Europe. We're looking at the latest on that.

we're also going to be chatting about chat GPT 5.6 and mythos with the US. The US is really putting a stranglehold on the latest and greatest models coming out of the two big frontier labs. So checking in on the latest on those. And also Facebook is getting into prediction markets, not just building its own prediction markets that doesn't really seem like it's for cash right now. It's for like points or something or like funny money. but also it really wants to cut deals with Kaushi and polymarkets.

So I'm wondering what the Zuck is really up to. And again, if it's just too late to the meta already, so to speak. All right. Okay, enough out of me. Let's just get into it. This is the breakdown. Nothing said on the breakdown is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only and any views expressed by anyone

on the show are opinions, not financial advice. Host and guests may hold positions in the company's funds or projects discussed. Okay, so European Binance users are being urged to take their funds and assets and everything else off of the platform. Binance, this is from the Financial Times on Friday. Binance has told its customers in the EU that it will stop providing services to them from next week because it will not be licensed to operate in the region in a significant setback for the world's biggest crypto exchange.

So these rules coming to effect from July 1, which is on Wednesday. And, I mean, Binance would have had to secure licensing from at least one EU member state before that January 1st deadline. but unfortunately it hasn't been able to do that. Binance's application, it had tried going through Greece. Binance's application in Greece for a block-wide license was rejected last week. Less than a fortnight before the deadline comes into force and the exchange now plans to apply through France,

where it has previously been in talks about a license according to people familiar with the matter. But as the Financial Times report, even if they do somehow convince France to award them a license for Micah, it will come way after the July 1 deadline, which I imagine is super frustrating for customers in the EU. And if you're basically changing platforms, it would be very difficult to convince them to jump back

once the license comes through, I would have to imagine. Binance customers in Poland, Italy, Spain and France have received emails this week telling them how to withdraw their money from the exchange because the company will not be granted a micro license by 30th of June, 2026. And I mean, Binan said, I mean, you know, I try not to really pay attention too much to what Binan says because it's always thick corporate jargon that comes out of Binance official statements in my experience.

Binance said the company did not receive a formal decision on its application in Greece, and so took the prudent decision to withdraw the Greek application and pursue authorization in another EU member state. So it's saying that, well, no, the EU didn't break up with us. We broke up with the EU is kind of what it's saying. But okay, everyone's kind of declined to comment. Greece's regulator didn't comment

France's regulator also declined to comment and I mean something that Binance is just trying to sweeten the deal I mean it's the same kind of thing that it told Malta back in the day when it tried to set up shop in Malta and then that never really crystallized either in an effort to win approval from authorities in Athens Binance committed to hiring many staff and opening an office in Greece

while promising to bring billions of euros in investment into the country two people familiar with the process said I find that a little bit It just makes me cringe a little bit that that's kind of what they're resorting to, but okay. But its Greek application was ultimately rejected because of concerns in many areas, in particular its money laundering controls, and whether Zau passed the fit and proper test they added, all to do with the months that they spent in prison and the billions of dollars worth of fines that

finances had to pay the US for its lax anti-money laundering controls is what the reason is effectively. And yeah, I mean, of course you have a bunch of crypto exchanges, you know, taking the opportunity to dunk on Binance for kind of screwing the pooch on its Micah licensing effort. You know, we have BitPanda. So I thought, you know, let's just take a look, number one, which crypto exchanges are licensed within Micah? And it's not everybody. It's not like all the other crypto exchanges are licensed while Binance is being hung out to dry. This is just from KaspTracker.EU. Kasp is the mica license.

So, yeah, I mean, this is the list of crypto exchanges that have either micro licenses or their license is in progress right now. We, of course, have Binance still in progress, Upbit. The South Korean Exchange BitGet is offshore. Their licensing is still in process. So is MEXC, HTX, BitFINEX. We know that Tether effectively had the same thing happen done to them that no longer regulated crypto exchanges in the EU can support USDT or any kind of tether products. So BitFinance obviously isn't that worried about it either.

BingX, Bitmart, L Bank and some of the kind of, you know, the lesser known crypto exchanges are all kind of have their licensing in progress, it seems. But the ones that are licensed, that includes ByBit OKX Coinbase, gate, Ku-coin, crypto.com, and Krakken. So I can imagine just from that list, the Krakken is really going to be the one that users flock to. But I mean, that's just my speculation there.

I mean, OKX and Coinbase, they look poised to capitalize as well, as does ByBit. So it's not only Binance that is struggling, but of course, Binance is by far and away the number one exchange for trading volume, although that has a lot to do with perps and so on. So speaking of that, let's take a look at the actual spot volumes.

So here I have the Blockworth Research Portal. We've got a centralized exchange dashboard. And we're just going to look at these spot volumes by exchange. So let's take a look exactly how big Binance is compared to all of its competitors. Let's just do weekly, actually, so we can get kind of latest numbers, just almost at the end of the month. So for the past couple of weeks, Binance has been processing close to $50 billion worth of spot trade. By far the biggest, I mean, number two is Bybit with about $13, 14 billion worth of volume

over the same time. Then it's Gate I.O and M-EXC. Coinbase is only about $10 billion. So Binance is processing about five times the volume that Coinbase is and about three or four times what Bybit is right now. So like in percentage terms, Binance has about one third of. of the market share of the global crypto exchange spot volume as tracked by Blockworth's research. And it is kind of holding steady.

I mean, about a year ago, often it would be close to 40%. At the start of 2025, again, close to 40%. And you have to go all the way back to 2024 to see it over 40%. So a slow slide in Binance's global market share, I suppose you could say, especially if we go compared to, say, 2022, when buying. Binance was close to 60%. Oftentimes two-thirds of the global spot volume occurred on Binance. So Binance has been steadily losing ground to its competitors

as they gained strength as well over the years. I suppose that's to be expected just with the growth of digital assets overall. But I mean, this market stuff is definitely not going to help Binance in that department. For futures activity, I think it's about similar. Let's just double check that. So this is going to be futures volume by exchange. Let's have a look. And these are, of course, only the centralized exchanges.

It doesn't count hyperliquid and so on. But in weekly view, what are we looking at? Binance has, actually, Binance has more market share for futures, but I mean, not by much. We're up to about 40% market share for Binance in the futures volume on the centralized exchanges. OKX is number two, and MEXC is, number three, OKX with 18% of the market share and MEXC about 11%.

So, I mean, are we seeing any major outflows from Binance because of all of this? I mean, the closest that we have for that right now is Defi Lama, which shows us the outflows in general. I mean, we have this chart here from them. So we can see here on the bottom right, we have some outflow data. And we're seeing, yeah, definitely some outflows, but nothing completely out of the ordinary. I mean, it's actually less outflows than what we were seeing basically on average over the past few months. So it's not like a big outflow, you know, a massive exodus from Binance over this EU stuff.

So we have this leaderboard as well from Defy Lama. And we're looking at over the past 24 hours, $384 million worth of assets pulled from Binance. over the past month, it's a billion dollars pulled. But I mean, in total, their assets is $132 billion on the platform. So if you lose $1 billion, it's less than 1% of its total funds. I mean, it must be like two thirds of a percent or something like that pulled. So I'm not sure what that tells you exactly. I'm not sure it tells you that there aren't, you know, comparatively that much,

that many, you know, high profile traders that really need. a micro-regulated exchange in the form of Binance to operate. So it means that basically, you know, you don't really need to have a lot of big fish exiting Binanus because either they're not on the platform to begin with or they're not in the European Union, which I'd have to say is probably in the latter case that that's the reason why we're not seeing such huge collapse in Binance flows or anything like that. You know, I mean, just in general, I mean, of course, finance would like to retain

all of its European Union users. and I would have to imagine that at some point it is going to get a micro license and resume. But for now, I'd just say this is something to watch for Binance. I mean, if this drags on for the rest of the year and they can't secure a micro license, then I suppose we might see some real damage done to its assets kept on the platform as European Union users go, well, okay, it's definitely not getting a license. Now I will pull my assets. But, you know, I just have to imagine that they have, you know, most of their user base,

their high profile user base is probably outside of the European Union, I would have to imagine. So whether this truly impacts Binance at a material level, at least right now in the interim, I'm not too sure. So just something to watch and let's see if Binance can figure itself out within the EU. I'm sure it has friends somewhere, but it might be an uphill battle for the meantime. So, okay, on to the next one. Okay, so both these stories actually came out on Friday on the same day. So it's, you know, the White House is very busy with its, with its, I mean, yeah, with its nitpicking of Frontier Labs.

I'm going to style it like that. I mean, this is from TechCrunch on Friday. The Trump admin releases Anthropic mythos. So it's not even fable that we're talking about. We're talking about the big bad boy mythos to be used by more than 100 U.S. companies and agencies. So two weeks into the band that caused Anthropic to pull its powerful cybersecurity oriented models, Mythos 5 and Fable 5 from the market, the Trump admin is softening its stance. It is now allowing Anthropic to make Mythos 5 available to more than 100 specific U.S. government

agencies and companies, including allowing the non-American employees of those organizations to access the models, both Semaphore and Reuters reported. This list also includes Anthropics' own non-American employees who were included in the original ban that forbade non-Americans from accessing the models. I mean, this is Howard Lutnik. He says that he is determined that appropriate safeguards are in place to permit certain trusted partners to access the Claude Mythos 5 model. Apparently, he wrote that to Anthropics Chief Computer Officer Tom Brown on Friday. So, I mean, yeah, okay, Howard Lutnik has determined that there are safeguards in place.

Okay, buddy. So, I mean, in terms of like Fable 5, the one that the general public is meant to have access to, that has not been addressed at the moment, which, I have to say is a little bit frustrating. Anthropic on Friday publicly acknowledge the progress in an expost running since June 12. We've been working closely with the US government to restore access to Claude Mythos 5 and Fable 5. And it can be redeployed to a set of organizations. Okay.

And we're continuing to work with the government to expand access to Mythos 5 and make Fable 5 and make Fable 5 available for general use again. Okay. So that's Anthropic. At the same time, we have open. Open AI trying to also release its latest model GPD 5.6. So this is now in the Guardian. Open AI is staggering the release of its latest AI model after request from the US government

in a move echoing the launch of Anthropics Methos product. The company behind ChatGBT signaled its dissatisfaction with the move, saying that doing so keeps the best AI tools from users, developers, enterprises, cyber defenders, and global partners who need them. Open Eye Center Friday was launching GPT 5.6 with these small group of trusted partners. This is what they said. As part of our ongoing engagement with the US government, we previewed our plans and the models capabilities ahead of today's

launch. Open AI wrote in a blog post at their request, we are starting with a limited preview for a small group of trusted partners whose participation has been shared with the government for releasing more brilliantly. It just gives me the creeps. Open AI is a little. I mean, Open AI is at least kind of, you know, saying some stuff, stating is disquiet with the US government approach. It said, we don't believe this kind of government access process should become the long-term default. And I would say fat chance of that. We are effectively now in a draconian regime when it comes to AI development. It kind of really takes a lot of the shine off it for me personally. However, the company said it believed

taking this short-term step was the strongest path to broader availability in the coming weeks as it works with the White House to develop a vetting and deployment framework for new models as required under Trump's executive order. Woof. I mean, yeah, I mean, this is also probably the stupidest part of this whole thing is that GPD5 comprises three versions, Sol, Terror and Lunar, which I know I'm late to riff on this, but I mean, could you have picked better names? this i mean i suppose i mean you know my gut reaction is that it just shows you how big crypto is in

in the world um or how little it is comparatively to to how i sees itself that you know chat jpita that sam altman can go ahead and name it soul terror and lunar and just trying to assume well yeah i mean i know there's crypto that uh does he know i mean apparently he has world coin and is so involved in world coin wink wink that he must have his finger on the button in terms of in terms of crypto but i would say that it's just like a who gives a crap we're just going to name it these because you know whatever we do is going to be way bigger than anything happened in crypto so so who kind of cares what we name it um open i i said gpt 5.6 soul was its strongest model yet but did not cross a cybercritical threshold under its internal framework

for measuring dangerous AI capabilities it added that soul was better at helping people find and fix vulnerabilities than reliably carrying out end-to-end tax. So apparently Altman said he said, apparently Altman says the government would be approving access customer by customer during this preview period for GPT 5.6 and that it would be released more generally a couple of weeks later if the process went well. So I mean, to me, this is clearly the beginning of the end in terms of, you know, this free flowing access to the bleeding edge of artificial intelligence and compute. It has to go through the bottleneck of the US government. And I mean, I know that there are a

bunch of Chinese models that are starting to rival the performance of these Frontier Labs models. And particularly like we still open source modeling is also is also growing at the same rate. But, you know, I mean, I ranted about this the other week that it would be great if every home could have their own offline AI model. So it didn't have to route through the US government. so we can at least, you know, use the capabilities that are out there. But, you know, of course, this is quite resource intensive. It's quite expensive, you know, to actually have enough compute within your own home to actually run these super powerful AI models.

So it's just, I mean, you know, I hate to be a downer for all this stuff. And I understand that so many people are your permables on AI because it's going to revolutionize, you know, all the companies that you're invested in the stock market. So it has to be great. But, you know, I mean, what can I really say? about it in that it's just it's obvious it is very clear that AI tooling is going to become a government approved tool for software engineering and perhaps maybe scientific research as long as it's not dangerous in the eyes of national security interests and so on we're just going to have this watered down

intelligence suite that is going to be permanently monitored by the u.s government and and so anything you do with it it has to be government approved which yeah i mean it's just already that just sounds so corny to me and the same thing happened with crypto. I hope hopefully you can see this as well in that we have freedom technology in the case of in the case of crypto meant to be able to tokenize whatever you want you're meant to be able to launch whatever company you lied and raise money from whatever from whoever investors that you like and you're not just restricted to accredited investors this was what it was until we had rules and regulations been forced down the throat you know of

of crypto entrepreneurs and crypto operators and so on. And what we are left with is a watered down version of crypto. And it is still powerful in the same way that compute and intelligence is still powerful as well, even if it is strictly controlled by the US government. Of course, these things are powerful. But you've got to admit that it takes some of the shine and some of the edge off of this technology as it is. I mean, it happened to crypto.

So, you know, I mean, of course, I mean, of course Bitcoin itself is unfettered by, you know, the wants and needs of the US government and so on. It's impervious to regulation at some point. But you, you as an individual, you are not free of rules and regulations just because you use Bitcoin. You know, obviously, Bitcoin, obviously crypto has figured out how it can operate within all of these bounds, you know, not just set by the US government, but also like Interpol, you know, the FATF. it has figured out how to exist and entrepreneurs and users have figured out how to either not draw attention to themselves or at least operate within the bounds that are set by these organizations and AI is going to go through the same thing. But it is pushing the coolness factor out into the edges.

And that's personally where I find the most interesting. But I mean, again, of course, I mean, I don't just want to say this is something to watch, but I'm just already coming to terms with the fact that, you know, your AI usage is going to be heavily monitored and restricted from now on if it is not already. And we're seeing, I mean, what choice does Anthropic and Open Eye have but to follow what the US government is telling them to do? What this is going to create is some kind of like product that you can buy that is like a self-contained compute unit for your space, but of course, because of all the chip

shortages and the RAM costs and everything. I mean, I mean, it's just trying to be expensive as well. But I'm not too sure what alternative we have at this point, but to figure out how to have self-sovereign AI as kind of all this gets worse. I mean, the AI models are getting more powerful and the US government is going to become more paranoid, primarily driven by the marketing of the Frontier Labs themselves. So perhaps, I mean, there's some kind of equilibrium that you can strike where the fronty lab stops saying that their models are just so powerful. and going to change the world and then the US government freaks out and forces them to restrict themselves. You know, degrades the freedom that you have as an individual compared to the companies and institutions that are on the white list of the US government.

I mean, it just sounds all so creepy to me. Hopefully, I mean, perhaps you're thinking somewhat similar, but this is just how I feel about this right now today. Okay, so on to the next one. Okay, so very quickly about meta trying to get into the prediction market. game. We take a look at the current state of prediction markets as well in a moment. So this is from the New York Times last week and we've had a follow-up since then. I mean, so I mean, the New York Times was reporting that Zuck had recently dispatched a small team at his company to create a smartphone app similar to Polymarket and Kauci,

according to two employees with knowledge of the matter. Users would not wage money and the app would probably rely on a video game-like point system instead. One person said that the company had not ruled out the eventual use of real money betting. The app is internally referred to as arena and would function independently from meta social networking apps, which include Facebook, Instagram, WhatsApp and Messenger. Meta aims to grow the app by leveraging its large social networking audience and directing them towards using it. The effort which Insiders characterized as experimental but a top priority is part of a broader push by Zuck

to create new types of apps based on emerging social behavior online. Arena is one of a handful of apps that meta is trying out. Others include one called Meta Photos, another standalone app, which would create new types of media using AI.

The employees said, meta declined to comment. And yeah, I mean, so only a few days later, apparently Zuck has urged his lieutenants to explore partnerships with the popular prediction market's polymarket and Kashi as his company builds a similar app.

So Zuckers asked meta-executives to talk with Polymarket and Kauci, though it is unclear how partnerships with it might work, said the three employees who spoke with the condition of anonymity. Zuckerberg's target demo for Arena is 18 to 34-year-olds and is aiming to reach at least 100 million monthly predictors for the app. Arena is being positioned as a place where people can bet on sports, culture, entertainment, politics, and finance against friends, family. Executives have called it an app design for everyone, they said. So I suppose that is

somewhat of a differentiator in that, you know, if you're just trying to bet against your direct circle, then it is somewhat better than trying to bet against all these degenerates on polymarket and so on. So I suppose that is something, you know, it's the zinger. It's the zinger. It's the zinger of prediction markets, which I suppose is, it's to be expected in some way. Arena is being tested internally and may not be released, the META employee said. If it is released, it will be initially a standalone app to see if people are interested in using it. Meta plans to eventually integrate parts of Arena into Facebook and Messenger, including by adding prediction bets into group chats,

the Reels, video product and ephemeral stories and inside Facebook's popular news feed. It is unclear if Arena will incorporate real money betting, but Zuck believes betting behavior could lead to increased activity across meta's apps. Users may engage in conversations, debates on Facebook and messenger about the bets, or share more often if their bets are correct. Meta may also incorporate game-like qualities, including leaderboards putting users in competitions with one another. Personally, I just don't see a future in this particular iteration of it,

because especially if it's not betting with real money, if it's just points and stuff, I mean, I can almost guarantee you're not going to get much engagement with it. But it is definitely a gateway into real money betting at some point because, you know, if your mother can bets right on the Super Bowl, you know, whatever it is and sees that she's killing it on the points, I mean, she's obviously going to start predicting for real money at some point. I would have to, I would bet. But okay, let's just, I mean, okay, so we just could put that aside and that, I mean, this whole

thing is that is Zuckerberg late to the party again because it was late to the party with the Metaverse and then that never really, the Metavers never really took her off at all. And now it's, I mean, since then, Meta is going through the roof. It's hit, it's in an all-time high. So whatever damage the Zuck did with its, with its quest to, to make the Metaverse a thing. I mean, that has completely unwound. I'm sure you already know. But let's just take a look at the latest in prediction market stats.

Okay, so here we have the total open inches for Polymarketer. And we can see there's actually falling of late. I mean, overall, we have peaked. I mean, we haven't quite hit an open interest peak from around the last U.S. election. Open interest peaked at about $510 million worth of open interest back then. The most we've gotten since then is about $4.94, and that was at the start of June, so the start of this month, since then we've been steadily falling. Now we're at an open interest of 310.

So, I mean, it's not like Polymarked has seen amazing growth right now. It did see amazing growth at the start of the year and heading into March. But since the end of the first quarter is basically trended sideways and now and now dipping. Active wallets is also on its way down. There's about 135 active unique wallets per day right now. I mean, in April, there was about 215,000. Transaction counts are also falling. But, I mean, it's not a huge collapse or anything like that,

but obviously, like, we've had the NBA championship wind up. I mean, it's interesting that, you know, open interest is falling even though the World Cup is still kind of going on and finalizing over the next few weeks. But, okay, I mean, that's Polymark. Let's have a look at Kalshi. Okay, and we're looking at Kowshi, and we're seeing a similar trend. Although Kalshi's open interest was more recently at its all-time high.

It's set an all-time high last week of $1.5 billion worth of open interest. So, Kauci far and away, the winner in terms of Kauci versus Polly Market right now. But its open interest has been dropping. It's now under a billion dollars. So, you know, over the past week or two, it's dropped by about 40, 50 percent. It's open interest. This notional volume is also dropping, but still much larger than Polly Market right now. So this is probably something to do with the World Cup effect, I would have to say. So, I mean, yeah, polymarket struggling to retain growth.

But I guess it's too early to say whether Kauci is also struggling to retain that growth. I've seen category market share, exotics explode for Kauci. I have to imagine that exotic is like palais. Yeah, I would bet that this has to do with palais. So, I mean, Kauci is really kind of killing it on the sports betting front. And, you know, Palais are obviously big with sports betting. So, you know, that's my, that's my hunch anyway in terms of why Kaushi is kind of exploding still. But so, I mean, yeah.

So, I mean, I'm not sure what we can read exactly from that. I mean, there is obviously still a lot of interest in prediction markets. And meta is indeed, you know, trying to do something to enter that game. But it seems a very, you know, consumer-normy-friendly way through to get through the whole prediction market meta. up but i suppose that's that's to be expected considering you know the facebook is facebook and and whatever so of course you're to have some normy friendly implementation of of prediction markets for from meta but this is about all i'm looking at this morning we're going to be checking in on the strategy stuff later in the week just to see the status of everything and what moves strategy is

making and and so on and maybe some other more exciting stuff will happen throughout the week that we can chat about later on so that's about it from me i hope you have a great day uh and as always look after yourselves. Goodbye.