Bernstein noted that the Binance Crypto exchange may not fail but noted that current situations are showing two problems with the Binance exchange, which will be eliminated shortly.
Binance is a popular Crypto exchange and this exchange is standing at the first rank in terms of 24 hours Crypto trade volume on its platform. As we know that sector’ 2nd ranked Crypto exchange FTX collapsed badly & filed for bankruptcy on 11 Nov 2022. After the downfall of the FTX exchange, many people claimed that Binance was another FTX exchange and could collapse. In response, Binance showed multiple proofs that exchange stands in a better position & can handle every situation easily.
On 2 Jan 2023, Bernstein published its research report and noted that Binance exchange standing in the best position and there are no chances for this exchange to face situation like FTX faced.
The research noted that Binance is solvent, liquid and stable, which is evident in the exchange’s more than $55 billion in a verifiable cold wallet address.
The report also noted that Binance already passed the Crypto withdrawal test on 13 Dec, where its customers withdrew approximately $6 billion worth of funds from the exchange but still the exchange was running smoothly without any issues.
“Binance’s undisputed market leadership has not been an accident – it has a long history of doing right by the customer,” the report added.
Bernstein’s research pointed out that exchange made customers whole through hacks and regulatory challenges. The exchange is holding 75% of the global Crypto trade volume.
Further, Bernstein stated that the exchange is facing two challenges. One of the challenges with Binance is its offshore holding company which is based out of the Cayman Islands, So Binance needed to focus on progressive steps moving towards an on-shore structure.
The second thing Bernstein noted was the monopoly of the Binance exchange. The meltdown of FTX & affiliated companies, Binance is currently holding the majority of the global trade volume and it sounds that Binance may show its monopoly but the report noted that the situation is not much favourable to centralised crypto companies because the majority of the crypto traders moving toward non-custodial crypto wallets and probably it will reduce the monopolistic position of Binance exchange.