Binance’s victory over FTX means more users moving away from central exchanges
Gracy
Based on the joint statements on Twitter this week from Binance CEO Changpeng “CZ” Zhao and FTX CEO Sam “SBF” Bankman-Fried, it seems clear that FTX has serious solvency problems — so dire that few in the m arket are willing to save it. As a result, FTX is turning to CZ as a prospective
buyer.
After CZ exposed FTX’s problems earlier in the week by announcing his plan to dump $500 million of its FTX Token
FTT on the
market, the companies said on Nov. 8 that they had entered into a nonbinding agreement for Binance to purchase FTX. It’s a tentative deal that means Binance can withdraw at any time without facing any consequences, and I personally believe it is very unlikely the acquisition will ultimately be finalized.
While SBF is the
sixth-largest individual political contributor in the United States — he gave a total of $39.8 million to the Democratic Party over the past year — it’s worth noting that the cash didn’t get FTX a license to operate in the United States. Owning FTX wouldn’t gain Binance any access to the market beyond what it already enjoys.
From a market share and platform standpoint, FTX does not offer any unique value to Binance (as a company like Twitter might). For all the business units that FTX offers, Binance has competitors of equal or even greater quality, including spot and derivatives trading platforms, staking products, and the ecosystem of startups building on its platforms. (That could extend to include
Solana, where FTX-funded startups compete with those on Binance's
BNB chain.) Binance will naturally win FTX’s clientele in the event that FTX fails, regardless of whether they make any deal.
The nonbinding agreement includes a due diligence period, which gives SBF a bit of breathing room to find other buyers on Wall Street. But the odds of that happening look increasingly slim with Binance involved, as prospective purchasers would be forced to keep the company afloat despite constant poking by CZ.
The reality is that FTX is already practically dead. Its FTT token is trading below $4, down roughly 80% since Nov. 7 — a period of just 24 hours. The company’s brand is beyond repair, and it will be exceedingly difficult to regain consumers’ trust.
As a result of FTX’s collapse, there are a few developments we might expect to see in the months and years ahead.
Exchanges will enter a consolidation phase: With FTX near death, Binance’s leading position is even more solidified. It will be hard to contest Binance’s leading status, and it’s likely that many small exchanges will fail due to the difficulty of gaining users’ trust. The exchange market is going to become more “oligopolistic” as a result.
There will be new opportunities for decentralized exchanges and lending: After a slew of major insolvency events this year — including Terraform Labs, Three Arrows Capital, Celsius Network and Alameda Research — the centralized lending business has lost people’s trust. Demand for “decentralized lending” will increase, ushering in long-term opportunities and innovation for decentralized finance (DeFi). This will lead to the disappearance of most centralized lending businesses.
Regulation will be strengthened: Countries will have more comprehensive and detailed regulations in terms of regulatory acts, financial licensing and investor protection, and will focus on strengthening the regulation of centralized exchanges and DeFi, with 2023 being the first year of regulation.
Cryptocurrency will have more guardrails: The industry will bid farewell to the era of barbaric unregulated growth, and asset management institutions in the industry will generally implement a set of strict risk control systems and complete audits to keep their companies running under a healthy, transparent, open
balance sheet. They’ll be more active in seeking compliance licenses, and the overall industry will develop in a more benign direction.
Hopefully, all of this will result in the next “crypto summer” coming very soon.
Source: https://cointelegraph.com/news/binance-s-victory-over-ftx-means-more-users-moving-away-from-centralized-exchanges
2023-06-05
Become a trader now?A welcome pack worth 6200 USDT for new Bitgetters!
Sign up nowRecommended
- GracyBuilding a Diverse and Inclusive Crypto Team: Insights from Gracy ChenWelcome to today's interview where we will be discussing the importance of building a diverse and inclusive team in the crypto industry. Our guest for today is Gracy Chen, an experienced leader in the crypto space with a strong commitment to diversity and inclusion. Gracy is the Managing Director at a blockchain-based company, where she has been working to build a diverse and inclusive team. The Future of Cryptocurrency: Gracy Chen's Perspective Ishan Pandey: Hi Gracy, can you tell us about yo2023-05-26
- Gracy2023 Will Be The Year of Crypto Market Recovery, Regulation Consensus, And M&AsHello everyone, we hope you are well. Today we're going to explain how we would go about building a balanced crypto portfolio starting from zero. We'll take the sum of 10,000 dollars as an example. This is a question that is asked a lot by beginners and so today it's time for us to present to you a type of portfolio that we believe is balanced and most importantly we're going to present to you the reasons and philosophy behind each of our choices. Are you ready? Let's go! The main investi2023-06-05
- GracyUSDC depegged because of Silicon Valley Bank, but it's not going to default Over the past week, investors understandably became concerned over the news that billions of dollars backing USD Coin — the second-largest stablecoin — were locked up in the distressed Silicon Valley Bank (SVB). The m arket reacted violently, causing USDC to lose its dollar peg. But while the concern was understandable, it has become clear that USDC creator Circle will regain full access to its funds. The crypto community can breathe easily. It started as2023-06-05
We offer all of your favorite coins!
Buy, hold, and sell popular cryptocurrencies such as BTC, ETH, SOL, DOGE, SHIB, PEPE, the list goes on. Register and trade to receive a 6200 USDT new user gift package!
Trade nowBecome a trader now?A welcome pack worth 6200 USDT for new Bitgetters!
Sign up now