Has the Binance Settlement Cleared the Path for a U.S. Spot Bitcoin ETF?

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The cryptocurrency world was sent into a frenzy last week with the bombshell news that Binance, the world’s largest crypto exchange by trading volume, had agreed to a $4.3 billion settlement with U.S. regulators over charges of money laundering and operating an unlicensed trading platform. As part of the deal, Binance’s charismatic CEO Changpeng “CZ” Zhao also agreed to step down from his position and plead guilty to criminal charges.

The immediate market reaction saw Bitcoin and other cryptocurrency prices tumble, but the overall tone from analysts seems to be that this monumental settlement between Binance and U.S. authorities may have finally cleared the way for a long-awaited Spot Bitcoin ETF to get approval. As one research firm noted, with Binance now being forced to follow the strict rules of regulated financial institutions, expectations for a spot Bitcoin ETF have jumped to nearly 100% probability.

A History of Rejections

US Bitcoin ETF

The Securities and Exchange Commission (SEC) has rejected over a dozen applications for a Spot Bitcoin ETF in recent years, mainly due to concerns over market manipulation and the lack of comprehensive surveillance-sharing agreements between crypto exchanges and regulators. While the SEC has approved Bitcoin futures ETFs, which derive their price from Bitcoin futures contracts rather than directly owning Bitcoin, a true spot ETF has remained elusive.

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Is the Path Now Clear?

With Binance being neutered and brought under the thumb of U.S. regulators through this massive financial penalty and probation-like compliance monitoring, the SEC may feel more confident that cryptocurrency prices would not be as easily manipulated going forward. As the world’s largest crypto platform, Binance has faced persistent allegations of wash trading and other artificially inflated trading volumes. Having them now operating under a microscope may help alleviate concerns at the SEC.

Optimism From the Markets

Cryptocurrency traders and analysts also seem optimistic that this development raises the chances of a spot Bitcoin ETF approval. As one analysis noted, with the uncertainty around Binance’s future activities now removed, markets appear to be pricing in the probability of a spot ETF getting greenlit sooner rather than later. Bitcoin and other crypto prices initially fell on the Binance news but have since rebounded, indicating markets are viewing this as a largely positive outcome for the asset class and its prospects of gaining more widespread mainstream adoption.

While the full ramifications of the enormous Binance settlement are still unfolding, most experts agree this landmark legal agreement has significantly improved the odds the SEC ultimately decides to take the plunge and approve the first true spot Bitcoin ETF in the United States. As the saying goes – watch this space! And don’t forget to follow EXEcrypto to read the latest crypto, Bitcoin, and blockchain news.

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