Bernstein Report: Binance Will Remain the Top Global Crypto Exchange Despite DOJ Settlement

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Binance, the world’s largest crypto exchange, is expected to maintain its position as the dominant global exchange, even after reaching a settlement with the U.S. Department of Justice (DOJ). 

According to a research report by broker Bernstein, Binance experienced minor outflows of less than $1 billion following the news of the settlement, but there was no significant panic among customers. 

Currently, Binance holds approximately $67 billion of customer funds under custody.

Analysts at Bernstein, led by Gautam Chhugani, highlighted that Binance’s reputation with retail non-U.S. customers has remained strong throughout the crisis. 

Despite the settlement, Binance is expected to remain a “material entity in non-U.S. markets.” 

However, the report also anticipates increased competition from rivals such as Coinbase and new exchanges in regulated markets like Hong Kong and Singapore.

Bernstein believes that Binance has adequate funds to settle the $4.3 billion fine while maintaining healthy operations. 

The research report suggests that Binance’s complete exit from the U.S. market would lead to continued dominance of onshore and incumbent exchanges in the country. 

It also noted that asset managers who have filed applications for regulated bitcoin exchange-traded funds (ETFs) are already working with exchanges like Coinbase for prime broking and custody services. 

On Tuesday, Binance, along with its CEO Changpeng Zhao, pleaded guilty to criminal charges related to anti-money laundering and violations of US sanctions. 

The plea was made as part of a comprehensive agreement reached with the US Department of Justice, allowing the company to continue its operations. 

However, Zhao will step down as CEO, and Binance will be required to pay a substantial $4.3 billion fine.

Under the terms of the settlement, Changpeng Zhao will also personally pay $200 million in fines. 

Binance Settlement Could Pave the Way for Spot Bitcoin ETF

The Bernstein report said that the settlement with the DOJ could be a significant step toward the approval of a regulated bitcoin ETF.

Markus Thielen, the head of research at crypto services provider Matrixport, has expressed a similar sentiment, stating that the plea deal between Binance and the DOJ is a favorable outcome for both Binance founder Changpeng “CZ” Zhao and the company itself. 

Thielen claimed that Binance will likely remain one of the top three exchanges in the near term. 

He also suggested that the industry’s adherence to regulatory rules, as indicated by the settlement, could increase the chances of a spot bitcoin ETF being approved.

As reported, new Binance CEO Richard Teng has hinted at the exchange’s ability to pay the $4.3 billion it has been fined by the US Justice Department. 

Teng, who was named CEO of Binance on Tuesday after Changpeng Zhao stepped down, said in a recent post on X (formerly Twitter) that the exchange is in good shape financially. 

The statement came in reply to a post by Connor Lango, director of business development at Coinbase, who said Binance will most likely be able to “pay full $4.3B DoJ fine with 0 crypto asset sales.”

Lango detailed that after pulling out Binance’s crypto holdings from their Proof of Reserves, he discovered that the exchange still had $6.35 billion in total assets and $3.19 billion in stablecoins.

The fundamentals of our business are VERY strong.

Binance continues to operate the world's largest crypto exchange by volume, our capital structure is debt-free, expenses are modest, and, despite the low fees we charge our users, we have robust revenues and profits. https://t.co/PHq2YS0CP5

— Richard Teng (@_RichardTeng) November 22, 2023

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