Five months ago, a cryptocurrency executive made the prediction that spot Bitcoin ETFs would only be permitted if Binance began to lose market share.
Many industry observers assert that Binance’s $4.3 billion settlement with the US was the last obstacle to be cleared before the nation’s securities regulator approved spot Bitcoin BTC $3797 exchange-traded funds (ETFs).
In order to comply with anti-money laundering and sanctions regulations, among other things, Binance agreed to submit to compliance monitors from the Justice Department and Treasury for a maximum of five years.
According to a June X (Twitter) post by Travis Kling, a chief investment officer of Ikigai Asset Management, Binance’s market dominance had to suffer before BlackRock’s spot BTC ETF application would be approved. The U.S. Securities and Exchange Commission has cited market manipulation when rejecting spot Bitcoin ETFs.
“Given Binance’s current dominant market position, there is absolutely no chance—none at all—that this ETF will be approved,” Kling wrote. “If this ETF is approved, Binance will either completely vanish or have a much smaller role in price discovery.”
Others began to wonder how closely BlackRock collaborates with the US government in order to gain a competitive edge in the spot Bitcoin ETF market after Kling’s prediction. Colin Talks Crypto, a YouTuber, expressed suspicion that Binance’s settlement occurred “just before a Bitcoin ETF comes out.”
“Is there any way for BlackRock to obtain a large amount of Bitcoin at a cheap price?” he asked.
“Is it possible to remove the competition from the American markets right before the ETFs launched?”
Others suggested that the action against Binance might have been prearranged after pointing out that BlackRock and its rival Vanguard jointly own 11.5% of Coinbase, Binance’s main rival.
During a meeting with the SEC on November 20, BlackRock discussed with them how the iShares Bitcoin Trust, its spot BTC ETF, could be redeemed in-kind or with cash.
During their meeting that same day, Grayscale also discussed its proposal to list a spot Bitcoin ETF with the securities regulator. Additionally, awaiting SEC approval of their spot, Bitcoin funds are Fidelity, WisdomTree, Invesco Galaxy, Valkyrie, VanEck, and Bitwise.
The CEO of Galaxy Digital, a digital asset investment company, Mike Novogratz, declared that the Binance settlement is “extremely optimistic” for the cryptocurrency industry.
Not everyone sees the point in speculating on whether the Binance news will result in spot BTC ETF approvals.
Conclusion
It is still unclear whether Binance’s settlement with the U.S. government will lead to the approval of spot Bitcoin ETFs. The SEC will need to carefully consider the regulatory concerns surrounding these ETFs before making a decision. However, the settlement is a positive sign for the cryptocurrency industry, and it could increase the likelihood of spot Bitcoin ETFs being approved in the future.
