Matrixport's latest report indicates that with CZ stepping down as CEO and the fine amount being lower than the previously feared $10 billion, Binance is likely to remain one of the top three exchanges in the next 2-3 years. There might be pressure for a “rationalization adjustment” of the company with its 6,000 employees. While the guilty plea agreement does not involve the U.S. SEC, it is considered a very favorable outcome for CZ and Binance itself.
Some may view the regulatory actions in the U.S. this year, dissolving banks associated with U.S. cryptocurrency and running an internal ledger that crypto companies could use to transfer fiat currency around the clock, as clearing the industry. Few remaining major players are thought to be involved, and the market is digesting a significant risk-avoidance event.
Regarding the impact of this regulation, the report analyzes that more exchanges will strengthen their compliance plans and become part of monitoring-sharing agreements, which will help in the approval of a Bitcoin ETF in the U.S. With this guilty plea agreement, expectations for a spot Bitcoin ETF may have increased to 100%, as the entire industry will be forced to comply with the rules that traditional financial companies must follow. Importantly, the whitening of this industry will strengthen institutional investor cases for Bitcoin adoption, potentially making Bitcoin a safe-haven asset in investor portfolios.
The report points out that the FTX exchange might be sold next month and operated by a management team compliant with U.S. securities laws, potentially relaunching the exchange in Q3 2024. Any Bitcoin ETF listed in the U.S. could see inflows of $24 billion to $50 billion, as seen with crypto companies trading on the Chicago Mercantile Exchange (CME). There will likely be a shift from wild west exchanges serving retail investors to fully regulated and compliant venues serving institutions.
Institutions are on the horizon, and all enforcement actions by U.S. institutions this year are seen as steps in that direction. With favorable conditions in the macro environment and institutional demand continuing, 2024 is likely to be another strong year for Bitcoin — CZ might return during the next bear market in 2026.