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Editing by Nathaniel Cajuday
- Research firm Bernstein has concluded that global exchange Binance is likely to continue to thrive in the future due to its solvency, liquidity, and stability during the bear market, or “crypto winter.”
- Bernstein noted that Binance has more than $55 billion in verifiable cold wallet addresses and has proven it can handle large withdrawals, citing the withdrawal of $6 billion in customer funds on December 13th.
- The report identified two challenges that Binance will need to address in the future: properly managing its current monopolistic position in the global crypto trading market and transitioning towards an on-shore structure to better serve its international customer base.
Despite the left and right collapse of entities in the crypto industry during the bear market, global exchange giant Binance will continue to prevail as it remained solvent, liquid, and stable amid crypto winter, brokerage firm Bernstein concluded in a research report.
According to Bernstein, the sturdiness of Binance was evident in the more than $55 billion in verifiable cold wallet addresses within the exchange. The firm also stressed that Binance can also “pass the test of withdrawals,” which already happened on December 13th, when $6 billion of customer funds were withdrawn.
“Binance’s undisputed market leadership has not been an accident—it has a long history of doing right by the customer,” the report read, adding that the exchange has made customers whole through hacks and regulatory challenges.
Consequently, the report cited two challenges Binance has to face; off-shore holding and properly managing its current monopolistic nature.
And since its customers are all over the world, the exchange must take “progressive steps moving towards an on-shore structure,” even at the cost of short-term business.
After the collapse of FTX, the former second biggest exchange worldwide, Binance was left with a huge market share and is now a “virtual monopoly in global crypto trading.” Currently, the centralized exchange holds about 75% of the global crypto trading market.
This is where Bernstein emphasized that Binance may now face several other competitors from decentralized exchanges, noting that traders could diversify their activities toward self-custody and decentralized trading platforms.
Recently, Binance joined the U.S. Chamber of Digital Commerce, a trade group representing the blockchain and cryptocurrency industry. The venture aims to advocate for and educate people about the benefits of blockchain technology and digital assets. (Read more: Binance Joins US Trade Group to Help Form Crypto Regulations)
Moreover, the exchange has also been active in establishing its presence in several countries. In December, according to some Indonesian media reports, Binance was in negotiations to acquire Indonesian crypto exchange Tokocrypto. It also acquired the Japanese crypto exchange Sakura Exchange Bitcoin (SEBC).
Last July, Binance announced that the Bank of Spain had granted its Spanish subsidiary, Moon Tech Spain, S.L., a Virtual Asset Services Provider (VASP) registration. (Read more: Binance Secures Regulatory Approval in Spain)
In October, Binance secured registration as a financial service provider with the New Zealand Ministry of Business, Innovation, and Employment (MBIE)—this also marked the official launch of Binance New Zealand. (Read more: Binance New Zealand Now Operational)
Last August, the exchange also signed a Memorandum of Understanding (MoU) with the City of Busan, South Korea, which states that Binance will support the city in creating infrastructure and providing the technology to develop its own blockchain ecosystem. (Read more: Busan Plans to be a Global Digital Financial Hub, Partners with Binance)
In the Philippines, Binance is still trying to secure a license, and since it was affected by the three-year moratorium of the Bangko Sentral ng Pilipinas (BSP), which will be active until 2023, the exchange revealed that it is trying to acquire a local company with the necessary licenses.
This article is published on BitPinas: Global Exchange Binance Unlikely to Fail in Future For Being Fluid During Crypto Winter — Study
Disclaimer: BitPinas articles and its external content are not financial advice. The team serves to deliver independent, unbiased news to provide information for Philippine-crypto and beyond.