Industry insiders are applauding the end of Binance led by “CZ” as a necessary move for the future of cryptocurrencies. CZ, short for Changpeng Zhao, founder and leader of Binance, the world's largest cryptocurrency exchange, pleaded guilty on Tuesday to several federal criminal charges brought by the Department of Justice and agreed to resign from his position as CEO. Cryptocurrency prices initially fell but stabilized on Wednesday as investors realized the situation was better than they feared. Some say it was perhaps even critical to what could be the next big step for the industry: the approval of a bitcoin ETF. To launch a bitcoin ETF – as BlackRock, Fidelity, Franklin Templeton and several others are trying to do – issuers must obtain bitcoin from somewhere, and while most companies applying for a fund have agreements with Coinbase, the discovery of Prices really happen on Binance. “Coinbase is not the largest liquidity center in the world, that is Binance,” said Michael Rinko, research analyst at Delphi Digital. "If you are actively investigating the company and the CEO who tells everyone the price of these assets, how are you going to greenlight an ETF? Having this deal behind us could be the last big step needed for this ETF" . The Securities and Exchange Commission was notably absent from the actions against Binance and CZ, which were a joint effort by the Department of Justice, the Commodity Futures Trading Commission, and the Department of the Treasury. The crypto industry has long sought to create a bitcoin ETF (efforts to launch one date back at least a decade). But the likelihood of this happening increased this summer when BlackRock surprisingly put its name in the hat, and it has continued to grow ever since. Fidelity, Invesco, Franklin Templeton and Ark Invest are just a few of the big names awaiting approval. The general consensus is that one will probably be approved sometime in the first half of next year, although some have said it could come sooner. Regardless of whether a dark cloud lifted the Bitcoin ETF or not, the Binance deal removes a huge source of market uncertainty, especially less than a month after FTX founder Sam Bankman-Fried was found guilty of several criminal charges of fraud and conspiracy. "A lot of people have FTX PTSD," Rinko said. "Those memories are still pretty fresh and when people hear 'centralized exchange research' they immediately think the worst." Sam Callahan, principal analyst at Swan Bitcoin, echoed that sentiment, calling the deal a positive development that will help the industry mature and move forward on more stable ground. "The industry has been further cleansed of bad actors," Callahan said. “Additionally, Binance being allowed to continue trading eliminates concerns that this could have significantly impacted market liquidity and caused a more systemic disruption to the broader crypto market.” CZ has always been a controversial figure tied to the reputational challenges Binance has long suffered, said Yesha Yadav, a law professor and associate dean at Vanderbilt University Law School. Because of that risk, her removal could offer positive change even beyond the company. “Binance is globally the leading liquidity pool for cryptocurrency trading despite losing market share this year,” she said. “If liquidity is reduced or fragmented across multiple platforms or if customers abandon Binance and cryptocurrencies, this may impact prices, where higher transaction costs arise due to lower liquidity.”
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What the Binance settlement means for crypto investors—and why it could clear the path for a bitcoin ETF
