Binance’s Settlement With U.S. Authorities Is Positive for Crypto as Well as the Exchange: JPMorgan

The settlement will significantly reduce the potential systemic risk emanating from a hypothetical collapse of the crypto exchange, the report said.

AccessTimeIconNov 24, 2023 at 9:40 a.m. UTC
Updated Mar 8, 2024 at 5:35 p.m. UTC

Binance’s settlement with the U.S. government is positive for the crypto industry as well as the exchange, JPMorgan (JPM) said in a research report Thursday.

For the wider market, the exchange's deal “would see significant reduction of a potential systemic risk emanating from a hypothetical Binance collapse,” the report said. It also reinforces an “ongoing shift towards regulated crypto entities and instruments which has been the objective of U.S. authorities post FTX’s collapse,” analysts led by Nikolaos Panigirtzoglou wrote.

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  • This shift toward regulated crypto companies and products is positive as more regulation will help attract investors from traditional finance, the note said, adding that the involvement of large asset managers such as Blackrock (BLK) and Fidelity in the approval of spot bitcoin ETFs by the Securities and Exchange Commission (SEC) supports this thesis.

    The agreement also reduces the uncertainty surrounding the crypto exchange, which will benefit its trading and BNB Smart Chain businesses, JPMorgan said. It noted that Binance had been losing market share due to uncertainty around this issue.

    “Its market share loss should be contained going forward and perhaps partly reverse once the implications from the settlement on Binance’s operations and business model become more clear,” the analysts wrote.

    Edited by Sheldon Reback.

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    Will Canny is CoinDesk's finance reporter.