Finance Docket: Crypto’s Terrible, Horrible, No Good, Very Bad, Actually Kind Of Hopeful For The Future Month
It certainly looks grim for crypto. But the Binance deal may, in fact, be the best thing that’s ever happened to it.
Ed. note: This article first appeared in the Finance Docket newsletter. Enter your email below to view the full newsletter and subscribe.
It’s been a brutal few weeks in the headlines for the cryptocurrency industry following FTX founder Sam Bankman-Fried’s fraud conviction earlier in the month.
The FTX saga is far from over: Its customers are still waiting to get their money back, and its bankruptcy advisers sued another crypto exchange for nearly $1 billion. Elsewhere in recent crypto news:
- OneCoin’s compliance chief pleaded guilty to fraud and money-laundering charges.
- Another allegedly once-fraudulent crypto shop, Celsius Networks — which claimed to be safer than a bank — emerged from bankruptcy offering its customers a mere 67 cents on the dollar of their deposits.
- The SEC punted once again on allowing spot crypto exchange-traded funds.
- The war in Gaza concentrated legislative and regulatory minds around doing something about cryptocurrency financing for terrorism.
- The world’s largest crypto exchange, Binance, struck $4.3 billion settlement and pleaded guilty to violating money-laundering laws and sanctions, including those on Hamas, as did founder and CEO Changpeng Zhao, who also agreed to step down from the company.
It certainly looks grim for crypto. But the Binance deal may, in fact, be the best thing that’s ever happened to it.
While cryptocurrency enthusiasts trumpet the benefits of decentralization, the industry is, in fact, extremely centralized, with massive platforms like Binance cornering the market. It turns out that crypto-entrepreneurs may be more interested in getting rich than in the ideology behind the blockchain.
And that — as the Binance settlement shows — gives governments, particularly the U.S. government, enormous leverage to drive crypto into less free-wheeling waters. The exits of crypto bros like Bankman-Fried and Zhao may open the door to institutionalists hoping to embed the blockchain in the existing financial infrastructure rather than overthrowing it.
There certainly are plenty who seem willing to try.
Former New York Stock Exchange President Tom Farley bought crypto media company CoinDesk and hopes to buy FTX out of bankruptcy with an eye on resurrecting the company — a prospect that even arch crypto-skeptic and SEC chief Gary Gensler isn’t shutting the door on.
The world’s largest money manager, BlackRock, isn’t reading too much into Gensler’s refusal so far to sign off on bitcoin ETFs, making its first move toward launching one to hold Ethereum. Meanwhile, some FTX alumni are racing from the witness stand to launch a new crypto exchange.
The Binance deal may also save the crypto industry from some regulatory headaches: Failed Speaker candidate and third-ranking House Republican Tom Emmer — a crypto backer — says the deal shows that there’s no need for new crypto-specific legislation.
To read the full newsletter, subscribe to Finance Docket by entering your email address below.
