Explosive Growth and Success of Binance
The explosive growth and success of Binance outside of the control of traditional financial and political establishments led to heavy-handed enforcement actions against the exchange, according to former BitMEX CEO Arthur Hayes. Hayes delved into the recent $4.3 billion settlement paid out by Binance in a lengthy Substack blog. This comes after the exchange and its founder, Changpeng "CZ" Zhao, admitted to violating United States laws around money laundering and terror financing.
Binance's Growing Influence on a Global Scale
As Hayes highlights, CZ’s global exchange became the largest by trading volume in the six years since its inception in 2017. The former BitMEX CEO points out that Binance would also be rated in the top 10 traditional exchanges by average daily volume, which is indicative of its growing influence on a global scale.
The Problem for the Financial and Political Establishment
"The problem for the financial and political establishment was that the intermediaries facilitating flows into and out of the industrial revolution named blockchain were not run by members of their class," Hayes opined. The former BitMEX CEO, who himself fell foul of violating United States Bank Secrecy Act (BSA) regulations after the exchange failed to implement adequate KYC procedures, highlighted Binance’s role in allowing everyday people to own intermediaries and cryptocurrency assets without needing traditional players.
The Largest Corporate Fine in Pax Americana History
"How dearly did CZ pay? CZ – and by extension, Binance – paid the largest corporate fine in Pax Americana history," Hayes stated. In contrast, mainstream banking and financial institutions involved in high profile scandals and the 2008 global financial crisis faced limited accountability.
China's Role in Driving Capital into Bitcoin
The former BitMEX CEO suggests that Chinese state-owned enterprises, manufacturers, and investors are set to begin investing capital offshore due to a lack of attractive returns locally. Capital making its way from China to Bitcoin will support the prices of all types of risk assets globally. Hong Kong’s recent approval of licensed cryptocurrency exchanges and brokers provides Chinese investors with a means to purchase Bitcoin.
China's Yuan-based Credit and the Rise of Bitcoin
Hayes outlines an argument for China increasing the availability and affordability of Yuan-based credit locally. This may lead to the price of Dollar-based credit to fall, causing fixed supply assets like Bitcoin and gold to rise in dollar fiat price terms. The "fungible nature of global fiat credit" will lead to dollars flowing into hard monetary assets like Bitcoin.
