Binance has disclosed a revenue-sharing agreement with Alpaca, the stock custody and trading firm, giving the crypto exchange 50% of the order flow revenue generated through the platform. The arrangement, confirmed in a company filing, ties Binance's profits to the volume of stock trades routed by Alpaca.
How the 50% split works
Under the deal, Binance receives half of the fees Alpaca collects from market makers for directing customer stock orders. That revenue stream, commonly known as payment for order flow, is a standard practice in the U.S. brokerage industry. Alpaca, which offers API-based stock trading and custody services, processes orders for both retail and institutional clients. The disclosure did not specify the dollar value of the agreement or the volume of orders involved. Binance said the arrangement reflects its strategy to broaden revenue sources beyond cryptocurrency trading.
What the deal signals
For Binance, the partnership with a regulated U.S. custodian may help burnish its image as it navigates legal challenges in multiple countries. Alpaca, meanwhile, gains a powerful partner that can direct trading volume to its network. The agreement also highlights the growing overlap between crypto exchanges and traditional securities markets. Alpaca, founded in 2015, offers commission-free stock trading through its API and has positioned itself as a bridge between traditional finance and fintech. Binance, founded in 2017, is the largest crypto exchange by volume. The revenue-sharing model is common among online brokers, but it is unusual for a cryptocurrency exchange to disclose such a deal with a traditional stock custodian. The move gives Binance exposure to the equity markets without directly offering stock trading to its users. Alpaca's platform allows developers to build trading apps, and its clients include both retail investors and fintech companies. The revenue from order flow is a significant income source for many brokers, and the 50% split indicates a close partnership. Neither company has commented on the specific terms beyond the 50% revenue share. The long-term impact on retail traders who use Alpaca's platform remains unclear.
