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Analysts' Insights

Analysts' Insights

Following the (Crypto) blueprint

1) Since the Fed / FDIC / OCC on Jan 3 2023: 'Agencies issue joint statement on crypto-asset risks to banking organizations' & the IMF on Jan 18 2023: 'Crypto Contagion Underscores Why Global Regulators Must Act Fast to Stem Risk', regulators have dismantled crypto rails.

2) The crypto on-off-ramp banking system was cut off (Silvergate / SVB / Signature ) & to force exchanges and crypto offerings out of the US. This has all been documented, there are no surprises.


3) Bitcoin prices rallied after the SEC sued Coinbase last night bcos the market had already been expecting this. After Kraken settled with the SEC on Feb 9 2023, & discontinued their ‘unregistered’ crypto staking business in the US, Coinbase received a Wells notice on Mar 22 2023 which signaled that Coinbase would be sued soon by the SEC.

4) Both SEC complaints against Kraken & Coinbase refer to ‘since 2019’ – the year when proof-of-stake (PoS) started. Despite Coinbase’s willingness to fight in court Coinbase will likely a) eventually settle with the SEC & b) pay a hefty fine & agree to give up its US staking business & focus on its overseas biz.

5) On Apr 20 2023, Coinbase obtained a license in Bermuda, & in May 2023, we heard that Coinbase was expanding in Singapore & considering setting up its international hub in the UAE. Similar to Binance, Coinbase has already taken steps to diversify its biz away from the US.

6) But the Coinbase complaint is very different from the Binance one. The SEC does not attack its founder & there does not seem Dept. of Justice (DoJ) implications that would result in personal liabilities as in the case of Binance.

7) The SEC will bar Binance and some of its executives from operating entirely in the US & while Binance has voiced their willingness to pay a huge fine, the SEC (& likely DoJ) will go really after them. Freezing Binance.US assets is equivalent to seizing its biz.

8) As we saw a decade ago when the US Financial Crimes Enforcement Regulation took place, crypto will be scaled in Asia, with the Middle East also now a viable option. There are 420m crypto owners worldwide, with 260m based in Asia & if there is ONE conclusion from my ‘Crypto Titans’ book, crypto is NOT going away.

9) Binance users have withdrawn $1.4bn during the last 24h ($2bn during Dec 2023 Binance FUD). BNB perps are trading marginally at a discount. $1.3bn has been withdrawn from Coinbase & Coinbase custody. The top 3 wallets moving funds out of Coinbase are all ‘big’ traders like Cumberland & BH Digital.

10) The winners: crypto firms in Asia. Those ‘multi-business’ integrated firms should now break up their entities & separate custody from exchanges, brokerage services etc. to resemble the traditional finance approach to provide visibility & trust.

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