Matrixport, a leading digital finance platform, released comprehensive research today, November 22 note focusing on the significant implications of yesterday’s developments in the crypto industry, particularly as they relate to the prospects of a spot Bitcoin exchange-traded fund (ETF) in the United States.
Following Binance CEO Changpeng Zhao’s (CZ) guilty plea and the significant financial settlements involved, Matrixport suggests the path forward for approving a spot Bitcoin ETF may have become much clearer. The note highlights regulatory crackdowns and compliance improvements in the crypto sector, indicating a move towards greater regulatory alignment with traditional financial systems (TradFi).
“Some would say U.S. agencies cleaned up the industry this year by breaking up U.S. crypto-related banks because two of them ran an internal ledger that crypto companies could use 24/7 to transfer fiat. Arguably few (perceived) major players remain, and with Bitcoin down just -3.4% in the last 24 hours, the market is facing a major risk aversion event” , notes Matrixport.
Spot Bitcoin ETF Approval Chances 100% Now?
The company highlights that with strict enforcement measures and enhanced compliance programs becoming the norm among cryptocurrency exchanges, differentiating between regulated and unregulated cryptocurrency exchanges could become a key metric in 2024. This change is considered as instrumental in the potential approval of a spot Bitcoin ETF in the United States, a development long awaited by the industry.
“The result will likely be that more exchanges will improve their compliance programs and become part of a supervisory sharing agreement, which will be instrumental in the approval of a spot Bitcoin ETF in the United States,” a the company said, adding: “With this plea agreement, expectations for a spot Bitcoin ETF may have increased by up to 100% as the industry will be forced to follow the rules that TradFi companies must follow.
The company believes that this “whitening” of the industry will not only improve the adoption of Bitcoin by institutional players, but will also position it as a safe haven in investment portfolios. “More importantly, the laundering of this industry will strengthen the case for Bitcoin adoption by institutional players and likely become a safe haven in investors’ portfolios,” Matrixport predicts.
The note also addresses the planned sale of the FTX exchange and its potential relaunch under a US securities law-compliant management team by the third quarter of 2024. Matrixport speculates that this could lead to inflows significant, estimated between 24 and 50 billion dollars, in any country in the United States. Listed Bitcoin ETF. They also note the growing trend of crypto firms creating markets in CME-listed crypto derivatives, indicating a shift from unregulated, retail-focused exchanges to those that are fully regulated and cater to institutional clients.
‘Dark Cloud has been removed’ as ETF advances
Analysts and industry experts echoed Matrixport’s sentiments. Will Clemente, a renowned analyst, declared“With the resolution on Binance, there are only a few weeks left until the Bitcoin ETF is approved.” Tony “The Bull” Severino, Head of Research at NewsBTC, commented, “A dark cloud has just been removed from the crypto market.” Conversely, Scott Johnsson, a financial attorney at Davis Polk, offered a more cautious view: suggesting that “it is much more likely that an ETF decision led to Binance’s resolution than the other way around in my opinion. Nor am I convinced that this is likely.
It is notable that there have been some movements in the ETF spot approval process in recent days. Ark Invest launched the third round of amendments to S-1 filings, Grayscale had a meeting with the United States Securities and Exchange Commission yesterday regarding its “offer for sale.”
At press time, BTC was trading at $36,483.
Featured image from Shutterstock, chart from TradingView.com