Will the market see a new outlook after CZ and Binance plead guilty?

CZ acknowledges the crimes identified by FinCEN and OFAC, including Binance's failure to implement anti-money laundering policies and sanctions regulations. However, will CZ's admission of guilt have a positive impact on the industry?

The Impact of Binance and CZ's Guilty Pleas

Binance CEO CZ pleads guilty and agrees to pay a $50 million fine, while Binance exchange will pay a $4.3 billion fine.

Cryptocurrency asset management platform Matrixport has expressed its views on the settlement between CZ, Binance, and the U.S. government.

CZ's Future Development

However, CZ's sentencing is currently postponed for six months, facing a maximum sentence of ten years, but CZ is willing to waive his right to appeal if the sentence does not exceed 18 months.

The current agreement prohibits CZ from engaging in related business for the next three years, but Matrixport believes this will provide him with a legitimate position when he re-enters the industry in the future.

Potential Growth for Binance

Binance exchange is accused of violating anti-money laundering rules, U.S. sanction rules, and is fined $4.3 billion in this plea deal, but it will reach agreements with institutions like FinCEN, OFAC, and CFTC.

Although this plea deal does not include SEC lawsuits, the outcome is a significant reduction in compliance uncertainties for CZ and Binance, which is a very favorable outcome.

With CZ resigning and the fine being lower than the originally expected $10 billion, Binance's status may remain stable, maintaining its position among the top three exchanges in the next three years.

Catalyst for Bitcoin Spot ETF

Following the Binance settlement, more exchanges may enhance their compliance measures and supervise each other, which is a significant step towards industry compliance progress.

This could help in the approval of a Bitcoin spot ETF in the U.S. The proportion of compliant exchanges may become a key indicator of regulation progress next year, reducing industry risks and aiding in the approval of a BTC spot ETF by the government.

Any Bitcoin ETF listed in the U.S. is expected to attract $24 billion to $50 billion in capital inflows, and the trading volume of cryptocurrency-related derivatives listed by cryptocurrency companies on the CME will provide further insights.

Structural Changes in Market Participants

In addition to existing exchanges, FTX Exchange may be sold next month and operated by a management team compliant with U.S. securities laws, which may relaunch the exchange by 2025.

As macro environments continue to drive institutional demand and market participants gradually comply with regulations, the market may shift from serving retail investors to regulated institutional investors and trading platforms.

All enforcement actions by U.S. regulatory agencies this year are aimed in this direction.

An Optimistic Outlook for the Future of the Industry

Matrixport believes that the settlement is very favorable for CZ and Binance, expecting Binance to maintain its position among the top three exchanges in the next three years.

On the other hand, the macro industry improvement in exchange compliance may pave the way for the approval of a Bitcoin spot ETF in the U.S., leading the market towards prosperity in the coming year.

Overall, Matrixport believes that after CZ's guilty plea, the market's bearish sentiment will dissipate.