According to broker Bernstein’s research report published on Wednesday, Binance remains the world’s most popular cryptocurrency exchange, with $67 billion in customer funds under custody. Although minor outflows of less than $1 billion occurred after the news of the settlement with the US government broke, there was no significant public panic.
“Binance’s reputation with retail non-U.S. customers has remained strong through the crisis,” analysts led by Gautam Chhugani wrote.
Although Bernstein notes that Binance will continue to be a “material entity in non-U.S. markets,” it anticipates more competition from new exchanges in regulated jurisdictions like Singapore and Hong Kong as well as from listed rival Coinbase (COIN).
According to Bernstein, the cryptocurrency exchange has enough money to pay the $4.3 billion fine and continue running its business profitably.
“Binance’s complete exit from the U.S would mean continued dominance of onshore and incumbent exchanges in the U.S.,” the authors wrote pointing out that exchanges like Coinbase are already providing prime broking and custody services to asset managers that have submitted exchange-traded fund (ETF) applications.
“In our view, this is the final straw before the establishment feels comfortable to approve a regulated bitcoin ETF,” they wrote.
Despite not involving the Securities and Exchange Commission (SEC), Matrixport, a provider of cryptocurrency services, notes that the plea agreement is a very good result for Binance founder Changpeng “CZ” Zhao and the business in general, and the company will probably continue to rank among the top three exchanges in the foreseeable future.
“With this plea deal, the expectations for a spot bitcoin ETF might have increased to 100% as the industry will be forced to follow the rules that TradFi firms must follow,” wrote Markus Thielen, head of research at Matrixport, referring to traditional finance.