Binance CEO Fiasco: Crypto will continue to thrive
Changpeng Zhao, or CZ, as he’s known, will cause short-term volatility within the crypto market with his departure from Binance. Still, it will continue to flourish as institutional money flows in.
On Tuesday, CZ pleaded guilty to money laundering violations. He agreed to paying a $50 million fine and stepping down from his position as the company’s CEO.
According to federal authorities, Binance has also pleaded guilty. It agreed to pay as much as $4.3 billion in fines and restitution to the government.
As I was quoted by Investing.com, International Investment, Financial Mirror, Financial Express, European Financial Review, CCN, AIThority, Silicon Republic, and Business Traffic, amongst other media, up to now, CZ has been the most powerful person in crypto. As a result, this scandal will spark a degree of short-term volatility in the market as investors take in the news.
That said, the crypto market will thrive as institutional money pours in, which we expect will continue.
Exchange-traded Funds
As it stands, BlackRock, the $9 trillion asset manager, along with WisdomTree, Invesco Galaxy, Wise Origin, VanEck, Bitwise, and Valkyrie Digital Assets, have published Bitcoin ETF applications. These are awaiting approval by the US Securities and Exchange Commission, the SEC.
We strongly believe that Bitcoin ETFs (exchange-traded funds) are imminently inevitable. These would help fuel cryptocurrency prices and mass adoption despite the Binance controversy.
Should the SEC approval occur, this would be a landmark moment for Bitcoin. The regulator’s approval would signal that the world’s largest crypto is, without question, part of the global mainstream financial system.
Spot ETFs invest directly in underlying assets, usually stocks or bonds, at the current market price (spot price). They aim to copy the performance of a specific index or asset class by holding a portfolio of the actual securities that make up the index.
Digital Currencies and Regulation
After a month-long trial resulted in founder Sam Bankman-Fried’s conviction on seven counts of fraud and conspiracy for the FTX collapse last year, the Binance scandal deals another blow to the cryptocurrency market.
Law enforcement and regulatory authorities across the globe appear to be cracking down on executives and organisations as digital currencies. This while crypto and central bank digital currencies (CBDCs) – are on track to become increasingly dominant in the global financial system.
Therefore, it is imperative to welcome increased regulatory scrutiny as digital currencies assume a progressively crucial role. Regulatory framework should intergrate cryptocurrencies and subject them to the same standards as the broader financial system.
Digital currencies aren’t going anywhere, and the market is only set to grow. Therefore, I believe prioritising the regulation of the crypto ecosystem is essential.
The sector needs to use the Binance CEO scandal as a turning point to further bolster itself. To enhance trust and transparency through sensible, workable regulation.
Read my previous blog post here