Binance Deepens Tradfi Push with Physically Settled Options on over 1,000 Us Equities

Binance is expanding its traditional finance foothold by launching physically settled options on more than 1,000 US stocks and exchange-traded funds, allowing eligible non-US customers to trade equity derivatives directly from their crypto account. The exchange disclosed on September 1 that Nest Trading Limited will introduce orders routed to Alpaca Securities LLC, which handles execution, clearing, settlement, and custody of any shares delivered upon exercise. The move marks a significant step in Binance’s ongoing strategy to blur the lines between crypto and traditional finance (TradFi), offering a unified platform where users can move among cryptocurrencies, equity exposure, and now options without leaving the Binance interface. The underlying securities infrastructure, however, remains entirely outside Binance’s own licenses. The New Product Architecture: How It Works Eligible users outside the United States can now trade physically settled options contracts on a broad basket of US equities and ETFs. The product is structured as a three-party arrangement: Binance acts as the customer-facing access point, handling order placement and account management. Nest Trading Limited (based in Abu Dhabi Global Market) serves as the introducing broker, routing orders to Alpaca. Alpaca Securities LLC (SEC- and FINRA-registered) provides execution, clearing, settlement, and custody of any shares delivered when an option is exercised. An options customer places an order through Binance, but Nest introduces it to Alpaca. If physical settlement produces shares, Binance says Alpaca holds them on the user’s behalf. Regulatory Footing and Licensing Details Nest’s Abu Dhabi Global Market register lists the firm as active under financial services permission 260000. Its permitted activities include: Arranging deals Dealing as an agent Arranging custody The register explicitly states that Nest cannot hold or control client money. Alpaca’s FINRA BrokerCheck profile identifies the firm as SEC- and FINRA-approved and lists options activity, securities clearing and settlement, and electronic trading among businesses it conducts or expects to conduct. The profile also says Alpaca can hold or maintain funds or securities and provide clearing services for other broker-dealers. Firm / Entity Role in the Product Regulatory Status Key Limitation / Capability Binance Customer-facing access point for order placement No US securities license involved Does not hold or custody shares Nest Trading Limited Introducing broker - routes orders to Alpaca ADGM registered (permission 260000) Cannot hold or control client money Alpaca Securities LLC Execution, clearing, settlement, custody SEC- and FINRA-approved Can hold/securities, provide clearing for other broker-dealers Broadening the Tradfi-crypto Hybrid Account Binance has been steadily adding equity-related products over the past year. The exchange already offers tokenized stocks and crypto-equity swaps. The addition of physically settled options on over 1,000 US equities and ETFs represents a deeper integration of traditional derivatives into a crypto-native platform. Customers can now manage multiple asset classes - crypto spot, margin, futures, tokenized equities, and now options - within a single account. The product is designed to allow users to move among more products without leaving Binance, while Nest and Alpaca carry distinct responsibilities behind the scenes. Market Implications and Competitive Landscape The launch positions Binance directly against traditional brokerages that offer equity options, but with the added convenience of crypto integration. It also competes with other crypto firms that have ventured into equities, such as Coinbase’s earlier attempts at tokenized stocks and platforms like eToro that offer multi-asset trading. By relying on US-registered Alpaca for clearing and custody, Binance avoids direct US regulatory exposure for the securities leg. The arrangement echoes the structure used by many crypto-to-equity bridges where the crypto platform acts as a front end while a licensed broker handles the regulated back end. Background: Binance’s Tradfi Expansion Timeline The exchange has been gradually building a bridge between digital assets and traditional markets: 2022: Introduced tokenized stocks (equity tokens) for selected US companies. 2023: Launched crypto-equity swaps and expanded tokenized stock offerings. 2024: Beta-tested equity options with a limited set of users. September 2024: Official rollout of physically settled options on over 1,000 US equities and ETFs. The product is only available to eligible users outside the United States, consistent with Binance’s lack of a US securities license. What This Means for Crypto Traders For non-US traders, the ability to trade traditional equity options from a crypto account reduces friction. Users no longer need to maintain separate brokerage accounts to hedge or speculate on US stocks. The physically settled nature means that if an option expires in the money, the trader receives actual shares, not cash settlement. However, the arrangement carries counterparty and regulatory risks. Nest cannot hold client money, and Alpaca’s custody is limited to the US clearing system. Binance users must accept that the equities leg is governed by US securities laws, while the crypto leg remains on Binance’s global platform. Immediate Industry Reaction The news has drawn attention from both crypto and traditional finance circles. Analysts note that the structure could serve as a blueprint for other crypto exchanges looking to offer regulated securities products without obtaining direct US broker-dealer licenses. The use of a registered introducing broker (Nest) and a clearing broker (Alpaca) mirrors the “dual broker” model common in traditional markets. No official price reaction has been observed for Binance’s own token (BNB) as of publication, but the broader market is watching whether this deepens liquidity for equity options among crypto-native traders. What Is the Difference Between Physically Settled and Cash-settled Options? Physically settled options require the delivery of the underlying asset (shares) upon exercise, while cash-settled options pay the difference between the strike price and the market price in cash. Binance’s new product is physically settled, meaning users receive actual shares held by Alpaca. Is This Product Available to Us Residents? No. The product is limited to eligible users outside the United States. Binance does not hold a US securities license, and the regulatory infrastructure (Nest, Alpaca) is designed to comply with non-US regulations. How Does Binance Handle Custody of the Shares? Alpaca Securities LLC executes, clears, and settles trades, and then custody any shares delivered when an option is exercised. Binance does not hold or control the shares; Alpaca holds them on the user’s behalf. What Are the Permitted Activities of Nest Trading Limited? Nest is registered in Abu Dhabi Global Market with permission 260000, allowing it to arrange deals, deal as an agent, and arrange custody. It is explicitly prohibited from holding or controlling client money. Can I Trade Options on All Us Stocks Through Binance? The product covers over 1,000 selected US stocks and exchange-traded funds. The exact list has not been fully disclosed, but it includes major equities and ETFs commonly traded in traditional options markets.