Is This the Time for Binance to Shine?
Binance’s CEO, Changpeng Zhao (also known as CZ), has been anxious to assert that, despite the spectacular fall of crypto exchange FTX in November, digital assets have a bright future to look forward to.
The “industry is still growing, we are still building”, he insisted. From the looks of things, he views his role as a “paramedic” for the crypto trading industry, speaking of plans to collect $1 billion to rescue ailing crypto projects. In late November, he said he wanted to try another bid to buy collapsed crypto lender Voyager Digital, as well as broker Genesis Global.
CZ even seemed willing to take over FTX when things started to go sour, before briskly changing his mind. Speaking of which, CZ’s status as crypto paramedic has been called into question by the UK parliament, who inquired whether he could have been unaware of the potential impact of his November 6th tweet (about his plans to unload $530 million worth of FTX’s token), a message which was a big trigger for FTX’s collapse.
This year could hardly be called CZ’s best, since he lost $80 billion personally in the crypto winter gripping the sector, but now that FTX has been cleared off the pitch, can he expect a period of industry dominance ahead? Let’s explore Binance’s prospects for 2023, especially with an eye out for readers engaged in CFD crypto trading.
Hero or Villain?
When the TerraUSD stablecoin went under mid-year, the consequences were plummeting Bitcoin prices, freezes on withdrawals at crypto exchanges, and job losses. Binance was also a casualty, having put $1.6 billion into the project. The fact remains, though, that, earlier in 2022, Binance openly encouraged its clients to send their money in the direction of Terra due to promised annual returns of about 20%.
Another question mark attached to Binance has to do with legal matters. The police raided their office in China in 2019 and they have been investigated by the US Department of Justice, the Internal Revenue Service, and the Securities and Exchange Commission. In June last year, Britain’s Financial Conduct Authority said Binance was “not capable of being effectively supervised”, an assessment which casts a critical light on CZ’s fitness to follow up with his November 2022 pledge to “work very closely with regulators all around the world to make the industry more robust”.
Sakura Exchange BitCoin – a crypto service provider based in Japan – was picked up by Binance near the end of November. CZ said he felt the Japanese market is destined for a “key role” in the progression of crypto trading adoption. Binance’s Takeshi Chino made an assurance that they would “develop our combined exchange in a compliant way for local users”.
Back in 2018, CZ was planning to set up a Japanese base, before giving up after regulators’ inquiries started coming in. As to the present regulatory climate, Prime Minister Fumio Kishida is in the process of launching his “New Capitalism” program by fostering web3 developers. Web3 refers to an expanded decentralized internet network which is imagined for the future.
The Road Ahead
Controlling a large stake in Elon Musk’s Twitter acquisition, Binance is doing its best to empower the social media platform with blockchains, and “actively brainstorming plans and strategies that could help Elon Musk realize his vision”, according to a company spokesman. One problem Twitter needs help with has to do with the high number of automated accounts on its platform.
As to the space left open by the demise of FTX, it may not be altogether clear how much Binance will benefit. “FTX’s collapse benefits no one, not even Binance, which will now face growing questions over its monopoly of market activity”, suggests Kaiko’s Clara Medalie. In contrast, tether stablecoin co-founder William Quigley says it’s clear Binance will benefit from the increased institutional funds which will now be sent in their direction.
In the meanwhile, Binance retains its status as the largest crypto company on the globe, with $50 billion moving through its platform every day. CZ even released a statement ensuring trust, saying, “We protect our users. We communicate with governments and regulators. You know, we’re the stable guys”. It’s worth noting that the word, “stable” has been used before in the context of cryptocurrency trading, with things turning out differently than expected.
CZ was asked about the potential repercussions of another big crypto titanic story, for example the collapse of Genesis Global, and answered that, “There will be pain whenever one player goes down”. Truthfully, there isn’t anyone who knows with certainty how many more beatings crypto confidence can endure, or what changes will have to be made in the industry to address its problems. Despite such uncertainty, knowing which way crypto sentiment is going on any particular day can help you make more informed CFD crypto trading decisions.