- Coinbase could be the de facto crypto exchange for investors as Binance navigates negative publicity, likely affecting its spot dominance.
- Having exercised caution with some regulation and compliance, the US-based platform’s approach could finally pay off.
- COIN stock is up 5% on the day as investors, including Ripple lawyer acquire more Coinbase shares.
Coinbase exchange, the main market rival against Binance exchange following the collapse of FTX, is seen emerging as the clear frontrunner after the largest cryptocurrency exchange and its CEO Changpeng Zhao (CZ) capitulated to the US Department of Justice (DoJ).
Coinbase could be the de facto crypto exchange after Binance debacle
Coinbase exchange stands to benefit the most, now that Binance exchange has succumbed to the US DoJ, with CZ officially stepping down as CEO, and advertently naming Richard Teng, former Global Head of Regional Markets, as the new CEO.
Today, I stepped down as CEO of Binance. Admittedly, it was not easy to let go emotionally. But I know it is the right thing to do. I made mistakes, and I must take responsibility. This is best for our community, for Binance, and for myself.— CZ Binance (@cz_binance) November 21, 2023
Binance is no longer a baby. It is…
With Binance in trouble, Coinbase CEO Brian Armstrong has ushered the exchange to the stage, saying, “We now have an opportunity to start a new chapter for this industry…Americans should not have to go to offshore unregulated exchanges to benefit from this technology.”
Pedaling the US as the rightful hub for crypto, Armstrong says Coinbase believes in economic freedom, demonstrating belief that the US democratic system will eventually get things right.
Since the founding of Coinbase back in 2012 we have taken a long-term view. I knew we needed to embrace compliance to become a generational company that stood the test of time. We got the licenses, hired the compliance and legal teams, and made it clear our brand was about trust…— Brian Armstrong ️ (@brian_armstrong) November 21, 2023
Ripple lawyer, John E. Deaton, seems to agree with Armstrong, acknowledging, “Coinbase will be a big winner.” His speculation comes on the back of the exchange-traded funds (ETFs) narrative that essentially stands on the shoulders of Coinbase.
Specifically, Coinbase Inc. has been featured in the spot ETF applications of multiple institutional players, including BlackRock, Chicago Board Options Exchange (CBOE), Fidelity, and Vanguard, listed for their surveillance sharing agreement (SSA), as indicated on Nasdaq's 19b-4 form. Its position as the largest crypto exchange in the US is likely the driving force for its popularity.
Gensler was asked today in a webinar about Coinbase being at center of ETF filings. He couldn't comment on the filings but went pretty negative on crypto exchanges saying they operate "conflicting services" and have "limited risk monitoring" Here's full quote via @TheBlock__ pic.twitter.com/iCVl906GyF— Eric Balchunas (@EricBalchunas) July 12, 2023
An SSA, short for Surveillance Sharing Agreement, defines an arrangement between crypto exchanges and regulators or market surveillance providers such as the SEC. It enhances the crypto market's integrity and transparency by sharing trading data and information.
Coinbase operates a significant part of the US-based spot trading platform for Bitcoin, representing a substantial portion of US-based and USD-denominated Bitcoin trading. Its collaboration with the CBOE ETF applications started on June 21.
At some point, the feature was a complication with the SEC citing cryptocurrency exchanges operating "conflicting activities" despite having "limited monitoring.”
If spot ETFs are approved, the institutional players would be able to share trade data with the commission, and book information, among other relevant market data. This would help put out or reduce the SEC's suspicion of market manipulation and allow it to confirm the lack thereof.
With Coinbase likely to become the frontrunner, Deaton has revealed having added to his Coinbase shares bucket by acquiring more COIN.
Coinbase COIN shares climb as the exchange takes the stage as likely de facto crypto platform
Coinbase (COIN) shares have climbed at least 5% on the news of the Binance exchange saga, testing the supply zone extending from $105.31 to $110.01. At the time of writing, COIN is trading for $105.54.
To confirm the continuation of the trend, the price must break and close above the midline of the supply barrier at $107.38, which would potentially set the tone for COIN price to clear the range high at $114.43, levels last tested on July 14.
COIN 1-day chart
(This story was corrected on November 22 at 07:41 GMT to say that Binance settled with the US Department of Justice, not the US Securities and Exchange Commission.)
Crypto ETF FAQs
What is an ETF?
An Exchange-Traded Fund (ETF) is an investment vehicle or an index that tracks the price of an underlying asset. ETFs can not only track a single asset, but a group of assets and sectors. For example, a Bitcoin ETF tracks Bitcoin’s price. ETF is a tool used by investors to gain exposure to a certain asset.
Is Bitcoin futures ETF approved?
Yes. The first Bitcoin futures ETF in the US was approved by the US Securities & Exchange Commission in October 2021. A total of seven Bitcoin futures ETFs have been approved, with more than 20 still waiting for the regulator’s permission. The SEC says that the cryptocurrency industry is new and subject to manipulation, which is why it has been delaying crypto-related futures ETFs for the last few years.
Is Bitcoin spot ETF approved?
Bitcoin spot ETF has been approved outside the US, but the SEC is yet to approve one in the country. After BlackRock filed for a Bitcoin spot ETF on June 15, the interest surrounding crypto ETFs has been renewed. Grayscale – whose application for a Bitcoin spot ETF was initially rejected by the SEC – got a victory in court, forcing the US regulator to review its proposal again. The SEC’s loss in this lawsuit has fueled hopes that a Bitcoin spot ETF might be approved by the end of the year.
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