A recent report from Matrixport has portrayed the outcome of the settlement between Binance and its founder, Changpeng Zhao (CZ), in a favorable light, absolving them of accusations regarding fund misappropriation or market manipulation.
Legal Settlement Details and Impact on Crypto Landscape
The settlement entails CZ admitting guilt for violating the Bank Secrecy Act. The charges against Binance encompass money laundering violations, operating an unlicensed money-transmitting business, and breaching US sanctions. Notably, US authorities haven’t alleged any misuse of user funds or market manipulation by Binance.
This development, as noted in the Matrixport report, could significantly impact the awaited approval of a spot-based Bitcoin exchange-traded fund (ETF) in the US.
Catalyst for Spot Bitcoin ETF Expectations
The announcement of Binance’s $4.3-billion settlement with US authorities, involving the Department of Justice, Commodity Futures Trading Commission, and US Treasury, created market turbulence on November 21. CZ’s acknowledgment of guilt in a felony charge as part of the settlement addresses both criminal and civil cases linked to the exchange.
Matrixport’s analyst, Markus Thielen, sees this as a potential catalyst for increased expectations of a spot Bitcoin ETF. Thielen asserts that the likelihood of such an ETF gaining approval may now be at 100%.
The adherence to regulations akin to traditional financial firms could fortify Bitcoin’s position as a safe-haven asset in institutional portfolios.
Moreover, the impending sale and restructuring of the FTX exchange to comply with US securities laws by Q3 2024 might reinforce the trend of compliant platforms for institutional investors.
Shifting Trends and Institutional Focus
US regulatory enforcement actions throughout the year signal a transition from unregulated retail-focused exchanges to fully regulated venues appealing to institutional investors.
The report speculates a significant influx, estimated between $24-50 billion, into any US-listed Bitcoin ETF. Additionally, the increasing participation of crypto firms in CME-listed crypto derivatives signifies the trend towards regulated and compliant platforms catering to institutional demand.
Future Outlook for Binance and CZ
The settlement, with CZ stepping down and a lesser-than-expected fine. It is also anticipated to sustain Binance’s position among the top three crypto exchanges for the next few years.
However, the exchange, currently employing 6,000 individuals, might encounter pressure to streamline operations following this agreement. Despite not involving the SEC, the plea deal signifies a favorable outcome for both CZ and Binance.