Matrixport, a leading digital financial platform, released an extensive study today, November 22 remark focusing on the significant implications of yesterday’s developments in the crypto industry, particularly regarding the prospects of a Bitcoin Exchange-Traded Fund (ETF) in the United States.
Following Binance CEO Changpeng Zhao’s (CZ) guilty plea and the substantial financial settlements involved, Matrixport suggests that the path for approving a spot Bitcoin ETF could have become significantly clearer. The note highlights the regulatory crackdown and compliance upgrades in the crypto sector, indicating a shift towards greater regulatory alignment with traditional financial (TradFi) systems.
“Some would argue that US agencies cleaned up the sector this year by dismantling US crypto-related banks, as two of them had an internal ledger that crypto companies could use 24/7 to transfer fiat. There are likely few (perceived) major players left, and with Bitcoin down only -3.4% in the last 24 hours, the market is facing a major risk event,” Matrixport notes.
Find out now Bitcoin ETF approval odds at 100%?
The company points out that as strict enforcement measures and enhanced compliance programs become the norm among crypto exchanges, the distinction between regulated and unregulated cryptocurrency exchanges could become an important benchmark in 2024. This shift is seen as instrumental in the potential adoption of a spot Bitcoin ETF in the US, a development long anticipated by the industry.
“The result will likely be that more exchanges will enhance their compliance programs and become part of an oversight sharing agreement, which will be instrumental in approving a spot Bitcoin ETF in the US,” the company said, adding added: “With this plea deal, expectations for a spot Bitcoin ETF could have increased to 100% as the industry will be forced to follow the rules that TradFi companies must follow.”
The company believes that this industry “whitewashing” will not only increase the adoption of Bitcoin by institutional players, but also position it as a safe haven in investment portfolios. “More importantly, the laundering of this industry will strengthen the adoption of Bitcoin by institutional players and will likely become a safe haven in investors’ portfolios,” Matrixport predicts.
The note also addresses the expected sale of the FTX exchange and its possible relaunch under a US securities law compliant management team in the third quarter of 2024. Matrixport speculates that this could lead to significant inflows, estimated between $24 and $50 billion, in any US economy. listed Bitcoin ETF. They also note the increasing trend of crypto companies creating markets for CME-listed crypto derivatives, indicating a shift from retail-focused, unregulated exchanges to exchanges that are fully regulated and focus on institutional clients.
‘Dark Cloud has been removed’ as ETF makes progress
Analysts and industry experts have echoed Matrixport’s sentiments. Will Clemente, a well-known analyst, declared, “With the resolution on Binance, it is only a matter of weeks until the approval of Bitcoin ETF.” 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: suggestive that “it is much more likely that an ETF decision drove the Binance resolution than the other way around imo. And I’m not convinced that’s likely.”
Notably, there has been some movement in the approval process for spot ETFs in recent days. Ark Invest has kicked off the third round of changes to its S-1 filings, Grayscale had a meeting yesterday with the US Securities and Exchange Commission about the ‘uplisting’.
At the time of writing, BTC was trading at $36,483.
Featured image from Shutterstock, chart from TradingView.com